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Annual Report and Financial Statements
for the year ended 31 December 2024
Schroder Asian Total Return
Investment Company plc
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Schroder Asian Total Return Investment Company plc
The Investment Objective of the Company is set out above. For details on the Company’s Investment Policy please see the KID. This
report includes the investment policy which you should read in conjunction with the KID before investing; these are also available on
our Schroders website.
Past performance is not a guide to future performance and may not be repeated.
The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally
invested. Exchange rate changes may cause the value of investments to fall as well as rise. Performance data does not take into
account any commissions and costs, if any, charged when units or shares of any fund, as applicable, are issued and redeemed. Relevant
risks as associated with this Company are shown on page 115 and should be carefully considered before making any investment.
Investment objective
Schroder Asian Total Return Investment Company plc seeks to provide a high rate of total
return through investment in equities and equity-related securities of companies trading
in the Asia Pacific region (excluding Japan). The Company seeks to offer a degree of
capital preservation through tactical use of derivative instruments.
Why invest in the Company?
Investing in high potential companies across the Asia Pacific region
The Portfolio Managers are benchmark agnostic, which means they can back their
highest conviction ideas with an active approach that is not tied to any particular
index resulting in a portfolio that is diversified across region and sector. With
a particular tilt towards small and mid cap names, they focus on well-managed
businesses that understand the importance of paying a good, growing dividend to
their shareholders as part of an attractive long-term total return.
Benefit from a smoother investment journey and the possibility
for higher returns
The ability to select stocks that have the potential to deliver strong long-term
returns is complemented by the use of a tactical hedging strategy. This focuses
on delivering a smoother ride in investing compared to the Reference Index by
reducing volatility and preserving capital. Altogether, this helps to mitigate some
of the broader risks associated with investing in Asia.
Rely on decades of Asian investment expertise
The Co-Portfolio Managers Robin Parbrook and King Fuei Lee have more than 50
years of combined investment experience and are renowned for their expertise
in Asian equity investing. They draw upon the extensive resources of Schroders’
Asia Pacific equities research team based in six offices across the region, as
well as Schroders’ London-based global sector specialists. This helps provide an
information advantage in an under-researched and market inefficient region.
Please see page 45 for the full investment policy.
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Contents
Section 1: Overview
Performance Summary 5
Chair’s Statement 6
Ten-Year Financial Record 9
Section 2: Investment Manager’s Review
Portfolio Managers’ Report 14
Top Ten Investments 32
Investment Portfolio 34
Investment Process 37
ESG Integration 39
Section 3: Strategic Report
The Company 44
Stakeholder Engagement – Section 172 Report 48
Risk Report 52
Conclusion 56
Section 4: Governance
Board of Directors 60
Directors’ Report 62
Audit and Risk Committee Report 66
Management Engagement Committee Report 69
Nomination Committee Report 70
Directors’ Remuneration Report 72
Statement of Directors’ Responsibilities in respect
of the Annual Report and Financial Statements 75
Section 5: Financials
Independent Auditor’s Report 78
Income Statement 83
Statement of Changes in Equity 84
Statement of Financial Position 85
Cash Flow Statement 86
Notes to the Financial Statements 87
Section 6: Other Information (Unaudited)
Annual General Meeting – Recommendations 106
Notice of Annual General Meeting 107
Explanatory Notes to the Notice of Meeting 109
Alternative Performance Measures and Glossary 111
Information about the Company 113
Risk Disclosures 115
12
42
76
58
104
2
The front cover is a photograph of a
snake pendant, taken in Indonesia.
This is in recognition of 2025 as the
Year of the Snake in the Chinese zodiac.
Possession of the pendant is traditionally
thought to bring good luck and
prosperity.
This is not a sustainable product for the purposes of the Financial Conduct Authority (FCA) rules.
References to the consideration of sustainability factors and environmental, social and governance
(ESG) integration should not be construed as a representation that the Company seeks to achieve any
particular sustainability outcome.
1
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Main Gate, Wuji Tianyuan Temple, New Taipei City, Taiwan
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 1: Overview
2
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Section 1: Overview
Performance Summary 5
Chair’s Statement 6
Ten-Year Financial Record 9
Section 1: Overview
3
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 39 Black Line Level: 12 Park Communications Ltd Alpine Way London E6 6LA
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Victoria Harbour, Hong Kong
Section 1: Overview
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
4
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Performance Summary
At 31 December 2024
1
Alternative performance measure, as defined by the European Securities and Markets Authority. Definitions of these performance measures,
and other terms used in this Report, are given on pages 111 and 112 together with supporting calculations where appropriate.
2
Source: Thomson Reuters.
3
Source: Schroders.
4
Source: Morningstar/Thomson Reuters.
Share price total return
1
+12.6%
2023: +10.3%
Reference Index
2
+12.1%
2023: +1.3%
Net Asset Value (NAV)
per share total return
1
+13.0%
2023: +8.8%
Ongoing charges ratio
1,3
0.9%
2023: 0.9%
Share price discount
to NAV per share
1,4
5.1%
2023: 4.6%
Net assets
3
£476.08m
2023: £448.48m
Gearing
1,3
8.5%
2023: 7.8%
Share price
4
483.00p
2023: 440.00p
Revenue return per share
3
9.61p
2023: 10.26p
Section 1: Overview
5
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 39 Black Line Level: 12 Park Communications Ltd Alpine Way London E6 6LA
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Chair’s Statement
Performance and background
I am pleased to report another year of
good performance from your Company
which delivered a NAV total return of
13.0%, outperforming the MSCI AC Asia
Pacific ex Japan Index (the Reference
Index) which rose by 12.1%. The share
price total return was 12.6% as the
discount widened slightly. It is positive
to note that this is the ninth year in
the last decade that the Company has
outperformed the Reference Index, which
has resulted in double digit annualised
returns for our long-term investors. The
Company’s returns were ahead of both the
peer group and the Reference Index over
the one, three, five and ten-year periods to
31 December 2024.
It was a year of two halves for
performance, with the majority of the
gains made in the first half of the year.
Taiwanese technology stocks, particularly
those linked to artificial intelligence
(AI), fared well and the Company’s
overweighting to Taiwan was a contributor
to outperformance. Taiwan Semiconductor
Manufacturing Company (TSMC), the
Company’s largest holding, made
substantial gains buoyed by demand for
its advanced semiconductors and stellar
performance from Nvidia in the United
States. Our Portfolio Managers’ stock
selection contributed to performance
across most markets, particularly in
Australia and Singapore, while the use of
derivatives was also additive.
Further comments on performance and
investment policy may be found in the
Investment Manager’s review.
Alpha Manager of the Year winner
In recognition of his consistently strong
performance, Robin Parbrook was
named ‘Alpha Manager of the Year’ at
the 2024 FE fundinfo awards for active
managers. The Alpha Manager Rating is a
quantitative rating that distinguishes the
top UK fund managers based on alpha
generation and outperformance across
their career history, allowing investors to
instantly identify those managers who
have consistently outperformed their peer
group over time.
For further information please visit:
https://www.fefundinfo.com/landing-
pages/inst/alpha-manager-of-the-year-
awards-2024
https://www.fefundinfo.com/products/
institutions/ratings
Earnings and dividends
Revenue return from the portfolio for the
year fell by 6.3% to 9.61 pence per share,
from 10.26 pence per share in 2023. While
the Portfolio Managers view income as
an important component of investment
return, they focus on total return, rather
than income.
The Board has therefore recommended
a final dividend of 11.50 pence per share,
maintaining the dividend at the same level
as the previous financial year. This is in
view of the reduction in revenue return
for the year, which will require the final
dividend to be part funded from reserves.
Subject to shareholder approval at the
Annual General Meeting (“AGM”), the
dividend will be paid on 9 May 2025 to
shareholders on the register on 11 April
2025. The ex-dividend date is 10 April
2025.
Discount management
The discount at which the Company’s
share price trades widened slightly during
the year from 4.6% at the start of the year
to 5.1% at the end of December 2024. The
year under review has been a challenging
time for investment trust discounts which
have widened across the board and
currently average 14.7%, attracting activist
investors and encouraging corporate
activity in the sector.
The Board aims to achieve a discount
of no more than 5% in normal market
conditions. Consequently, the Board made
use of its authority to buy back shares
to assist in discount management and
to reduce share price volatility. A total of
3,709,666 shares were repurchased during
2024, amounting to 3.8% of the issued
share capital at the start of the year. The
shares were repurchased at an average
discount of 6.6%, for a total consideration
of £17.0 million, and placed in treasury for
possible future reissuance at a premium
to NAV. Buying back shares is accretive to
the Company’s NAV. The Company’s shares
traded at an average discount of 6.8%
during the year.
Sarah MacAulay
Chair
This is the ninth year
in the last decade
that the Company
has outperformed the
Reference Index.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 1: Overview
6
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Since the year end and up to 14 March
2025, the latest practicable date prior to
the publication of this report, no shares
were bought back by the Company. On
14 March 2025, the discount at which
the Company’s share price trades had
narrowed to 3.5%, comparing favourably
to the average discount for the investment
company sector and the peer group.
The Board will be seeking approval from
shareholders to renew the issuance and
buy back authorities at the AGM to be held
on 24 April 2025, further details of which
can be found on page 106.
Gearing
Gearing continued to be actively utilised
by the Portfolio Managers during the year
and ranged between 3.8% at its lowest
and 8.8% at its highest. Gearing made a
positive contribution to performance. The
Company has started to use contracts for
difference (CFDs) in addition to the loan
facility as a flexible and more cost-effective
means of borrowing. Shareholders should
be aware that the use of borrowing must
be seen in the context of the use of
derivative hedging instruments.
The Company may use gearing to enhance
performance, but net gearing will not
exceed 30% of NAV. The Board has agreed
a disciplined framework for using gearing
to increase market exposure, based on a
number of valuation indicators.
Fees
For the first time since 2021 the Company
has paid a performance fee in addition to
the management fee of 0.65% of gross
assets less cash and cash equivalents. A
performance fee is payable amounting to
10% of any outperformance of the NAV
over an annual hurdle of 7%, provided
that the closing NAV per share exceeds
the “high water mark” NAV at the date the
last performance fee was paid. The sum
of the base fee and any performance fee
payable is capped at 1.25% of the closing
net assets. In addition, the Manager may
only be paid a performance fee when the
Company’s NAV total return is equal or
greater to the total return of the Reference
Index.
Following the outperformance, the
Manager generated a performance fee
of £2,767,000 for the year ended 31
December 2024.
The Board
The Board continues to review its
composition and effectiveness as well as
planning for succession. The Board was
pleased to welcome Marion Sears as a
non-executive Director on 24 April 2024
and as the Company’s Senior Independent
Director (SID) with effect from 4 December
2024. Caroline Hitch stepped down from
the Board, having reached her nine-year
tenure, at the conclusion of the AGM in
April 2024.
Outlook
Geopolitics continues to dominate
headlines as the world reacts to new
policies emanating from the recently
elected Trump administration. In particular,
the US President’s use of tariffs and the
threat of more is disruptive to global
trade and has significant consequences
throughout the region. The expectation of
imminent interest rate cuts in the US has
dwindled as inflation remains stubbornly
high, putting pressure on Asian currencies.
China’s economic growth prospects
are hampered by lacklustre domestic
consumption, the long and slow unwinding
of the property bubble and excessive
provincial debt. However, much of this is
already reflected in Asian valuations which
are at all time relative lows to developed
markets.
Our Portfolio Managers continue to find
exciting investment ideas in the region
and with an index agnostic investment
approach stock selection will remain
critical. Our two Portfolio Managers
have decades of collective investment
experience and an excellent long-term
track record of delivering value to
shareholders. Schroders has a large, well-
resourced team of analysts in Asia that
provides a depth of research across the
region with a universe of 900 companies
covered and around 2,700 company visits
each year. We remain confident that our
Portfolio Managers are well positioned to
navigate diverse and challenging equity
markets in the region.
The Company’s returns were ahead of both the peer
group and the Reference Index over the one, three,
five and ten-year periods.
Continuation vote
The Board has committed to put to
shareholders a resolution at the AGM that
the Company continue as an investment
trust for a further three years.
Over the three-year period ended
31 December 2024, the Company’s NAV
produced a total return of 2.34% per
annum, outperforming the 1.82% per
annum total return of the Reference
Index, while our share price produced
a total return of 0.85% per annum. It is
worth noting however that the last three
years has been a difficult time for Asian
equity markets and that although the
Company’s relative return was positive,
absolute returns were disappointing.
Looking longer term, over five years, the
Company’s NAV returned 9.0% per annum
and the share price 7.8%, compared to the
Reference Index return of 4.2%. Over ten
years, the NAV returned 11.3% per annum
and the share price 11.6%, compared to
the Reference Index return of 7.0%.
The Board believes that the Manager
remains well qualified and suitable to
manage the portfolio and to assist the
Company in meeting its investment
objective. The Portfolio Managers have
extensive investment experience and
are well resourced, with support from a
regional research team of 45 analysts.
The Board also believes that the Company
is well positioned as an investment
vehicle within its peer group, and that its
long-term investment objectives remain
appropriate and the structure beneficial to
shareholders.
As previously mentioned, this is the ninth
year in the last decade that the Company
has outperformed the Reference Index.
The Board therefore unanimously
recommends that the Company continue
as an investment trust, and the Directors
intend to vote their shares accordingly.
Results webinar, presentation and
AGM
There will be a presentation by the
Portfolio Managers at 12.00 noon on
Thursday, 24 April 2025 which will be
available to watch online and also for
shareholders to attend, prior to the AGM,
at the offices of the Investment Manager
at 1 London Wall Place, London EC2Y 5AU.
Past performance is not a guide to future performance and may not be repeated. The value of investments
and the income from them may go down as well as up and investors may not get back the amounts originally
invested.
Section 1: Overview
7
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 39 Black Line Level: 12 Park Communications Ltd Alpine Way London E6 6LA
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To sign up to watch the presentation
online please click on this link: https://
schroders.zoom.us/j/82547849490?pw
d=P7BEhDzatGWPqYBfclz39zn7bWLd
so.1. Please click here https://mybrand.
schroders.com/m/23fe589407a4be1/
original/Schroder-Asian-Total-Return-
Investment-Company-AGM_-Portfolio-
Manager-Presentation.ics to add this
virtual presentation to your calendar.
Details on how to watch the presentation
are also available on the Company’s web
pages: www.schroders.co.uk/satric.
The formal business of the AGM will
commence at 1.00 pm on Thursday,
24 April 2025 at 1 London Wall Place,
London EC2Y 5AU, following the
presentation by the Portfolio Managers.
Shareholders are encouraged to attend
both the presentation at 12.00 noon and
the AGM at 1.00 pm at the Investment
Manager’s offices.
By making the Portfolio Managers’
presentation available also as a webinar,
I hope that shareholders, who are unable
to attend the presentation and AGM,
along with interested parties, will be able
to listen to, and ask questions of, the
Portfolio Managers.
AGM shareholder communication
and engagement
The Board understands the significance
of having regular access to information
for our shareholders. In addition to
our Company web pages, we provide
shareholders with the opportunity to
subscribe to Company email updates.
These emails feature updates about the
Company, along with news, opinion pieces,
and market insights. Details on how to
subscribe can be found on the inside front
cover of this report.
We are pleased to note the strong
contributions of all investment trust
shareholders at recent votes, including
those holding through retail platforms,
across the sector following extensive
proactive shareholder engagement.
These investors have played a key role in
the outcomes of these votes and we would
encourage them to continue to make their
voices heard in all AGMs going forward.
If any of the Company’s shareholders are
at all unsure of how to vote their holding,
they should contact their nominee for
immediate assistance as we, alongside
many others, are keen to see that these
improved participation figures are
sustained across all investment trusts,
including at this Company.
The Board encourages all shareholders
to either attend the AGM or exercise
their voting rights by proxy. Proxy votes
can be submitted electronically through
the registrar’s portal, by post and also
by email. Details are set out in the
Explanatory Notes to the Notice of AGM in
this Annual Report.
The Board acknowledges that certain
execution-only investment platforms
are now enabling shareholders to vote
electronically. We encourage shareholders
to utilise this feature where it is available.
The Board is committed to exercising the
highest standard of corporate governance
and accordingly, regularly considers the
views of its shareholders, offering to meet
with major shareholders annually. We
also seek to engage with all shareholders
where possible and should you wish
to contact me, you can do so via the
Company Secretary whose details are set
out on page 114.
Sarah MacAulay
Chair
18 March 2025
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Section 1: Overview
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Ten-Year Financial Record
At 31 December 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Shareholders’ funds (£’000) 154,186 195,017 294,426 293,783 357,871 483,548 551,745 457,474 448,484 476,076
NAV per share, diluted where applicable
(pence)
211.36 267.09 354.79 321.43 365.57 479.07 507.24 434.60 461.24 509.04
Share price (pence) 190.00 255.50 362.00 331.00 368.00 489.00 506.00 409.50 440.00 483.00
Share price (discount)/premium to
NAV per share (%)*
(10.1) (4.3) 2.0 3.0 0.7 2.1 (0.0) (5.8) (4.6) (5.1)
Net gearing (%)*
1
1.0 7.0 4.5 (0.9) 2.2 5.7 8.3 9.0 7.8 8.5
For the year ended 31 December 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Net revenue return after taxation (£’000) 3,236 3,940 4,183 6,303 7,653 8,308 9,809 13,466 10,497 9,164
Net revenue return per share (pence) 4.43 5.40 5.48 7.18 8.10 8.46 9.25 12.47 10.26 9.61
Dividends per share (pence) 3.80 4.50 4.80 6.20 6.50 7.10 8.50 11.00 11.50 11.50
Ongoing charges (%)* 0.97 1.00 0.96 0.86 0.85 0.87 0.84 0.82 0.87 0.90
Performance
2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
NAV per share total return
(pence)*
100.0 102.9 132.2 178.4 163.9 189.7 253.6 272.3 237.8 258.7 292.3
Share price total return (pence)* 100.0 99.4 136.2 196.0 181.7 205.5 278.6 292.2 241.4 266.3 299.8
Reference Index
3
total return
(pence)
100.0 95.9 122.1 152.7 139.6 160.0 189.9 186.1 172.9 175.1 196.3
1
Net gearing represents borrowings including CFDs used for investment purposes, less cash, expressed as a percentage of net assets.
2
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 December 2014.
3
MSCI AC Asia ex-Japan Index (with net income reinvested), sterling adjusted.
*
Alternative performance measures. Further details can be found on pages 111 and 112.
Section 1: Overview
9
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1
Alternative performance measure. Source: Morningstar/Thomson Reuters.
NAV per share, share price and Reference Index total returns for the ten years ended 31 December 2024
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 December 2014.
Ten year share price (discount)/premium to NAV per share
1
50
100
150
200
250
300
350
Dec 14
Dec 15
Dec 16
Dec 17 Dec 18
Dec 19
Dec 20
Dec 21 Dec 22 Dec 23 Dec 24
NAV total return
Share price total return
Reference Index total return
6
4
2
0
-2
-4
-6
-8
-10
-12
Dec 14
Dec 15
Dec 16
Dec 17
Dec 18
Dec 19
Dec 20
Dec 21
Dec 22
Dec 23
Dec 24
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Section 1: Overview
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Wat Pho Temple Complex, Bangkok, Thailand
Section 1: Overview
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Gardens by the Bay, Singapore
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Section 2: Investment Manager’s Review
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Section 2: Investment Manager’s Review
Portfolio Managers’ Report 14
Top Ten Investments 32
Investment Portfolio 34
Investment Process 37
ESG Integration 39
Section 2: Investment Manager’s Review
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2024 began on a promising note for the Company, given its limited exposure to
China’s struggling economy and the ongoing regulatory uncertainties, thus shielding
it from stock market volatility there. Significant positions in Taiwanese technology
and shareholder-value-focused companies across Asia Pacific drove outperformance
relative to the Reference Index for most of the year. However, September 2024
brought surprises in Chinese government policy that led to a domestic market
rally, reducing earlier gains. Additionally, Samsung Electronics faced scrutiny over
its struggles with high-bandwidth memory (HBM) chips and declining smartphone
market share, further weighing on performance. Despite these challenges, the NAV
total return for the year was 13.0%, outperforming the Reference Index which rose by
12.1% (Source: Schroders, net of fees).
Investment clusters overview
To evaluate performance, we revisited the four investment clusters that have long shaped
our approach to Asian equities. A brief overview of these clusters provides context.
Cluster One consists of China and Hong Kong, representing structurally challenged
markets in secular bear trends. Here, the investment focus remained on the best private
sector companies rather than state-owned enterprises (SOEs). Cluster Two comprises
Korea and Taiwan, home to world-class technology companies, albeit with volatility due
to their dominance in the cyclical semiconductor industry. Australia and Singapore make
up Cluster Three, representing well-regulated markets with stable capitalist foundations.
These markets are ideal for reliable dividend plays that generate attractive total returns
over time. Lastly, Cluster Four contains India and ASEAN (the Association of Southeast
Asian Nations)
1
, true emerging markets (EM) with high growth potential tempered by
political and regulatory risks. Together, these clusters offer a balanced framework for
us to navigate Asia’s dynamic investment landscape, capturing opportunities while
managing risks.
1
ASEAN excluding Singapore.
Robin Parbrook
Lee King Fuei
Portfolio Managers’ Report
We view Asian equities not as one coherent asset class but as four disparate investment clusters
Asian Equities: One coherent asset class?
We view them as primarily four disparate investment clusters with different drivers
China/Hong Kong
• Structurally challenged, secular
bear markets.
• Some good companies but
valuations are not as low as the
bulls will claim.
Korea/Taiwan
• Principally technology-heavy
(semiconductors) stock markets.
• Attractive companies with strong
intellectual property and entry
barriers – cyclical but with growth.
• Where some of the best stocks in
Asia can be found.
Australia/Singapore
• Well-regulated stock markets in
countries with strong secular
attractions and good capitalist
underpinnings.
• Lower growth but lots of strong
dividend yields and attractive total
returns.
India/ASEAN
1
• Genuine emerging markets.
• Strong gross domestic product (GDP)
growth but more volatile politics and
regulation.
• Positive long-term structural outlook
in India, the Philippines and Indonesia
but valuations in the former are now
expensive.
1
ASEAN excluding Singapore
Source: Schroders
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
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Performance of investment clusters in 2024
How did these investment clusters fare compared to the Reference Index in 2024? To answer this, we delve deeper into each cluster,
breaking them into sub-thematic components to understand the key drivers of their performance.
In Cluster One: China/Hong Kong, we differentiate between SOEs and non-SOEs, as these segments followed distinctly different paths
in a structurally challenged market. For Cluster Two: Korea/Taiwan, we examine the two markets separately. Korea includes “Value-up”
1
companies, which are part of reform efforts aimed at closing the “Korean discount”, and non-Value-up companies. Taiwan is analysed
by its AI sector, which has been a major thematic driver, alongside non-AI sectors. In Cluster Three: Australia/Singapore, companies are
categorised into high dividend yielders (DY) that provide steady income streams and low or no dividend yielders (Non-DY) with lower
payout ratios. Finally, in Cluster Four: India/ASEAN, we consider India and ASEAN as distinct investment areas.
The Reference Index recorded a 12.1% absolute GBP return in 2024, driven by several standout trends. Leading the gains were
Taiwan’s AI plays, which saw exceptional performance fuelled by investor enthusiasm for AI demand and Nvidia’s consistently optimistic
forecasts. This segment not only outperformed domestic peers but also outshone the broader region. Chinese SOEs emerged
as a surprise outperformer. Despite exposure to years of overinvestment in infrastructure and a struggling property market, tacit
government support during the year bolstered their share prices, resulting in returns that outpaced their often rapidly weakening
underlying fundamentals. India secured the third spot, benefiting from the “China plus one” diversification trend and favourable
domestic policies, attracting capital from local and international investors.
At the opposite end, Korea was the biggest disappointment. Political controversies surrounding President Yoon’s administration,
weakening demand for electric vehicles (EVs) that affected Korean battery manufacturers, and a sharp decline in Samsung Electronics’
share price contributed to the market’s underperformance. The lacklustre results in the “Value-up” segment were particularly notable,
as the government’s attempts to replicate Japan’s success in closing valuation gaps largely fell short, leading to increasing scepticism
about policy effectiveness. Taiwanese technology stocks outside of the AI space, along with non-technology segments in Taiwan, also
struggled, further emphasising the concentrated strength of AI-related plays in the region.
1
Value-up companies exhibit characteristics such as strong corporate governance, a focus on innovation and strategic partnerships.
Index-weighted average 2024 return of the sub-thematic components of the investment clusters
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
Cluster One: CH / HK
Cluster Two: KR / TW
Cluster Three: AU / SG
Cluster Four: EM Asia
MSCI AC APxJ
1
Weighted average return (GBP, %)
AU/SG: DY
EM: ASEAN
KR: Value-up
KR: Non Value-up
AU/SG: Non-DY
CH/HK: Non-SOE
EM: India
CH/HK: SOE
TW: AI
TW: Non-Tech
MSCI
1
TW: Tech
1
Reference Index
Note: The size of the bubbles represents the weighting of each sub-investment cluster in the Reference Index.
Source: Factset, Schroders
Section 2: Investment Manager’s Review
15
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Cluster performance
The year’s performance review is perhaps best examined through the lens of these clusters and their sub-thematic components,
bringing the Company’s overall strategy and results into sharper focus.
Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and
investors may not get back the amounts originally invested. The Investment Manager invests on a discretionary basis and there are no restrictions on the extent to which the
Company’s portfolio and performance may deviate from the Reference Index. The Investment Manager will invest in companies or sectors not included in the Reference Index
in order to take advantage of specific investment opportunities.
Excess returns attribution by investment cluster
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
KR/TW
3.07
HK/CH
4.96
EM
2.58
AU/SG
1.52
Stk select in
non-SOE
Zero-wt SOE
Stk select in
DY/non-DY
Stk select in
TW non-AI
OW TSMC
Zero-wt rest
of KR
Zero-wt TW AI
OW KR
Memory
Zero-wt MY
Stk select in
rest of EM
+13.0
MSCI
1
CH/HK
AU/SG
KR/TW
KR/TW
EM
(Malaysia)
EM
(India/ASEAN
ex Sing)
Hedging
Cash/Cost
of leverage
Company
1
Reference Index
Source: Factset, Schroders, Company NAV return, net of fees
Cluster One: China/Hong Kong – a challenging year
Navigating China and Hong Kong proved difficult. While early 2024 saw SOEs benefiting from government-backed initiatives, the
Company’s focus on high-quality private companies still delivered strong results for the first eight months of the year. However,
significant policy stimulus in September 2024 triggered a sharp rally in Chinese markets. The Chinese internet sector, including JD.com,
Alibaba, and Meituan, surged, but limited exposure to these holdings impacted performance. Traditional Hong Kong-listed companies
like Shenzhou International and AIA underperformed during the rally despite delivering reasonable earnings. These challenges have
prompted internal discussions about refining buy disciplines to better capitalise on volatile Chinese markets that are driven more by
sentiment and speculation than fundamentals. Overall, the China/Hong Kong cluster detracted from performance, underscoring the
challenges of navigating markets where fundamentals are not the primary drivers of short-term performance.
Cluster Two: Korea/Taiwan – net contributor but mixed results
Korea and Taiwan delivered contrasting performances. In Korea, contrary to the widespread optimism on the Corporate Value-Up
program at the start of 2024, the market ended the year as the worst performing market of the region. The government’s Value-up
effort has largely failed to materialise amid the political controversies surrounding President Yoon’s administration, leaving investors
increasingly sceptical of the country’s political credibility. While the Company had an underweight exposure to the market, it was
insufficient to offset the drag from our positioning in the country’s memory sector. Samsung Electronics’ share price was particularly
disappointing as the company faced intensified competition from Chinese dynamic random access memory (DRAM) manufacturers,
a declining global smartphone market share, and challenges in the AI memory chip segment. Conversely, Taiwan’s contributions
were robust. The long-term position in TSMC outperformed materially, fuelled by surging demand for AI chips. Additionally, strong
stock selection in other Taiwanese non-AI segments, including Chroma ATE, MediaTek, and Voltronic Power, further strengthened
performance, culminating in a significant net positive contribution from this investment cluster.
Cluster Three: Australia/Singapore – a reliable contributor
This cluster remained a cornerstone of stability. High-dividend-yielding stocks such as Singaporean banks DBS Bank and United
Overseas Bank performed well, reinforcing the cluster’s reputation for reliable income generation. Non-dividend-yielding names like
ResMed and Aristocrat Leisure also delivered strong returns, underscoring the often overlooked opportunities in the Australian market.
Overall, this cluster made a meaningful positive contribution, reflecting its role as a stabilising force within the portfolio.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
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Cluster Four: India/ASEAN – positive but uneven
India and ASEAN markets contributed positively to performance. In ASEAN, strong stock selection in holdings that included port
operator, International Container Terminal Services, and leading banks in Indonesia and the Philippines added value. However, absence
from the outperforming Malaysian market was a missed opportunity. In India, the underweight position in a strong-performing market
was a minor drag. Nonetheless, good stock selection, highlighted by MakeMyTrip, helped deliver modest gains. While broader Indian
equity performance was mixed, the cluster remains a promising area for growth and hopefully alpha generation
1
in 2025.
Gearing
The Company continued to deploy gearing during the year as regional valuations were reasonable and our top-down composite
valuation indicator remained in the neutral territory. At the end of 2024, the Company’s gearing was 8.5% obtained through a
combination of the credit facility, and the introduction of CFDs, which helped to reduce the overall cost of borrowing against a relatively
high-interest rate backdrop. While the use of gearing still involves a marginal cost to the Company, this flexibility plays a crucial part in
enabling the Company to capture additional market upside, providing an added source of alpha which should more than offset the cost
of gearing over the long term.
Hedging Strategy – a modest contributor
Despite typically acting as a drag in strong market years like 2024, the Company’s hedging strategy contributed 0.3% to performance
in 2024. Notably, our VIX (Volatility Index)
2
call
3
options performed particularly well, mitigating downside risks while enhancing returns,
and reaffirming the value of the disciplined approach to hedging in volatile markets.
Conclusion
As we reflect on 2024, it is evident that the year tested the Company’s adaptability and discipline amid dynamic market conditions.
Despite some challenges in certain clusters, the Company delivered reasonable results, outperforming the Reference Index and
reinforcing the strength of its diversified, long-term approach. Looking ahead to 2025, we remain steadfast in our commitment to
navigating Asia’s complex investment landscape with the same unconstrained, benchmark-agnostic approach to stock selection, as we
aim to build on performance in 2024 and to continue to generate positive results for our shareholders.
1
For further details please refer to: https://www.schroders.com/en-gb/uk/individual/glossary/
2
The CBOE Volatility Index (VIX) is a real-time index that represents the market’s expectations for the relative strength of near-term price changes of the S&P 500
Index (SPX). Because it is derived from the prices of SPX index options with near-term expiration dates, it generates a 30-day forward projection of volatility.
Volatility, or how fast prices change, is often seen as a way to gauge market sentiment, and in particular the degree of fear among market participants.
3
Calloptionsarefinancialcontractsthatgivethebuyertheright,butnottheobligation,tobuyastock,bond,commodity,orotherassetorinstrumentata
specifiedpricewithinaspecificperiod.Acallsellermustselltheassetifthebuyerexercisesthecall.
Chinese battery manufacturer CATL was a new addition to the portfolio
during the year. The company’s success has been driven by its market
leadership in the production of lithium-ion batteries and its strategic
partnerships with major global electrical vehicle producers.
Section 2: Investment Manager’s Review
17
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Chart 1: Asian Markets have sharply underperformed since the US election
Asia Pacific ex Japan vs Developed Markets (DM) and US (total return, 22/1/24=100)
90
95
100
105
110
115
US$
Jan-24
Mar-24
May-24
Jul-24
Sep-24
Nov-24
Jan-25
APxJ/US
APxJ/DM
US Election
Source: CLSA, MSCI, December 2024
Strategy and positioning for the Year of the Snake
In the second part of our review, we discuss the Company’s positioning as we enter 2025, or in the case of China, the Year of the Snake.
Prospective returns from Asian equities face two significant headwinds as we enter the New Year. Firstly, uncertainty around Trump
2.0, and what this is likely to mean for Asian interest rates, exchange rates, and trade flows are a potential headwind. President Trump’s
policies as stated are quite negative for both the economic and earnings outlook in most Asian countries. Higher-for-longer US interest
rates are likely to put pressure on currencies in the region, leading to higher rates and dampening economic growth. Trade tariffs, if
implemented in the manner suggested by Trump’s more aggressive narrative to date, are expected to be disruptive and potentially
negative for the region’s exporters. As Chart 1 shows, Asian stock markets have materially underperformed since the US election.
The second headwind for the Company’s prospective returns is China, given the economic, regulatory and geopolitical uncertainties.
Much like the US policy outlook, the regulatory and geopolitical outlook in China is effectively unpredictable. Regardless of this, we see
headwinds for Chinese listed stocks that leave us cautious. However, given current poor sentiment and low valuations, we can find
opportunities despite the fact that without a policy volte-face, we view Chinese equities as in a secular bear market.
How do we position from here? If the supposed “guardrails” in US institutions work (thus reducing the worst of the trade tariffs and
other threats) then perhaps we can see a rebound in Asian markets most of which are now discounting a gloomy scenario. But at
the time of writing, we really do not know. What we can say, however, is that valuations in Asia are now at their all-time relative lows
versus developed markets and at least we should see some support from high dividend yields in a region that has relatively low listed
company corporate debt levels (Chart 2).
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
18
Section 2: Investment Manager’s Review
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Chart 2: Are headwinds from Trump 2.0 discounted? We do not know but dialling back rhetoric would be
positive for Asian stock markets which look oversold and offer attractive dividend yields
Source: CLSA, IBES, MSCI, December 2024
Source: CLSA, MSCI, December 2024
In absolute terms, valuations in Asia also look reasonable, as shown in Chart 3 which has two of the indicators we use to determine the
level of gearing
1
in the Company. Our top-down value indicator (rolling aggregate of price to earnings ratio, price to book
2
, dividend
yield and price to cash flow) shows that Asian valuations are exactly in-line with the long-term average. Our bottom-up value indicator
(number of stocks our research team cover in Asia with upside to our fair value) is running at 62%, which is above the long-term
average of 55%, indicating reasonable value and good stock opportunities in the region.
Chart 3: Our proprietary valuation indicators are now neutral to positive
Schroders Top-Down Valuation Indicator (I)
Schroders Bottom-Up Valuation Indicator
Chart 3
Schroders Top-Down Valuation Indicator (I)
Schroders Bottom-Up Valuation Indicator
Chart 3
Source: Factset, Schroders, December 2024
1
Please refer to the “Alternative Performance Measures and Glossary”.
2
Price to Book ratio: Price-to-Book (P/B) ratio: Market Share Price/Book Value. Book value: value of a company’s total assets minus its total liabilities. Useful when comparing similar
companies valuations within the same industry that follow a uniform accounting method for asset valuation. It can offer a view of how the market values a particular company’s
stock and whether that value is comparable to the Book Value Per Share.
EM versus DM relative + 12m consensus P/E
APxj versus DM relative +12m consensus P/E
Schroders Top-Down Valuation Indicator (I)
EM versus DM relative dividend yield
APxj versus DM relative dividend yield
Schroders Bottom-Up Valuation Indicator
Section 2: Investment Manager’s Review
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Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Given the indicators, at the time of writing, the Company is running with moderate gearing of 8.5% reflecting reasonable, albeit not
oversold, valuations. This also means that the Company is running with little hedging as most of our hedging models also indicate
moderate downside risks (a caveat: quantitative models do not tend to pick up President Trump’s tweets). At the time of writing, the
only downside hedges in place are a small position in puts
1
on the Indian index. So, in summary, we enter 2025 with a very uncertain
market outlook, however a lot of this looks to be reflected in Asian stock market valuations so, if we avoid the worst of Trump 2.0 and
China risks ease, we can see the prospect for good total returns for the Company in the coming year.
How is the Company positioned for the upcoming Year of the Snake? Chart 4 has the clusters we used in the review section with the
current weightings of the Company and the positioning against the Reference Index.
1
Aputisanoptionscontractthatgivestheownertheright,nottheobligation,tosellacertainamountoftheunderlyingasset,atasetpricewithinaspecified
time.Thebuyerofaputoptionbelievesthattheunderlyingstockwilldropbelowtheexercisepricebeforetheexpirationdate.
Chart 4: Asian equities: one coherent asset class?
Weviewthemasprimarilyfourdisparateinvestmentclusterswithdifferentdrivers
Asian Equities: One coherent asset class?
We view them as primarily four disparate investment clusters with different drivers
Source: Schroders
China/Hong Kong
• Structurally challenged, secular bear
markets.
• Some good companies but valuations are
not as low as the bulls will claim.
• Hong Kong/China exposure 24%,
underweight -7%
Korea/Taiwan
• Principally technology-heavy
(semiconductors) stock markets.
• Attractive companies with strong IP and
entry barriers – cyclical but with
growth.
• Some of best stocks in Asia.
• Exposure: Taiwan 25%/Korea 3%, Taiwan
Overweight 6%/Korea Underweight 5%
Australia/Singapore
• Well-regulated stock markets in
countries with strong secular
attractions and good capitalist
underpinnings.
• Lower growth but lots of strong
dividend yields and attractive total
returns.
• Australia/Singapore exposure 25%,
overweight +6%
India/ASEAN
1
• Genuine emerging markets.
• Strong GDP growth but more volatile
politics and regulation.
• Positive long-term structural outlook in
India, the Philippines and Indonesia but
valuations in former are now expensive.
• India exposure 13%, underweight -6%
• ASEAN exposure 13%, overweight +10%
1
ASEAN excluding Singapore
Source: Schroders
For illustrative purposes only and does not constitute any recommendation to buy or sell the above-mentioned security/sector/country.
Please note that the value of investments and the income from them can go down as well as up and investors may not get back the amounts
originally invested.
Looking at Cluster One, the Company remains underweight Hong Kong/China. As mentioned earlier, without a change in policy
settings, we take the view that Chinese stock markets are in a secular bear market. We do not believe current, and hoped for, stimulus
packages will reverse this. As shown in Chart 5, we have had at least eight supposed economic stimulus packages since 2008, and none
have delivered a sustained rebound in Chinese stock markets.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
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Why is this? It is principally because stimulus packages do not address the underlying issues in the Chinese economy. Instead, they
often exacerbate issues by creating more excess overcapacity in industries considered strategic, focus on building infrastructure of
questionable value, and allowing banks to evergreen bad debts (Chart 6).
%
% of GDP, rhs
Monetary easing
Fiscal measures
%
% of GDP, rhs
Monetary easing
Fiscal measures
Chart 5: Policy support is significant in size, but execution is key
Latestsupportmeasuressignalapolicyshift,butasustainedrecoveryrequiresmore
Source: Deutsche Bank Research, MoF, PBOC, Wind, October 2024.
Source: Refinitiv Datastream, as at 30 September 2024, in local currency.
Instead, what we would like to see in China is a reining in of financial excesses, crystallisation of bad debts, recapitalising banks, and
the introduction of concrete broad-based measures to boost consumption. Dealing with a financial bubble is always painful, as your
Portfolio Managers, who worked through the Japanese bubble, Asian financial crisis and the global financial crisis, know. However,
without creative destruction and capital cycles you miss the essence of capitalism and, in our view, end up with a secular bear market.
Charts 7, 8, and 9 explain the issues. The current policy focus in China, like Japan through the 1990s, is focused on keeping the ship
afloat and avoiding taking pain; this is likely to be deflationary and a headwind for Chinese stock markets.
Chart 6: Further investment-led stimulus could exacerbate overcapacity and pressure corporate earnings,
which is negative for stockmarkets
Arecap–China’sgrowthmodelandwhatitmeans?
Chart 6
Source: NBS, NBER, Minack Advisors, October 2024
Source: NBS, MSCI, NBER, Minack Advisors, October 2024
EPS: Earnings per share
21
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
China’s latest stimulus package could potentially
be the largest in history in nominal terms, and
3rd largest as a percentage of GDP
This time is different? Policies driven stock market
rallies are a regular event in China – but overall the
structural issues reassert themselves...
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Chart 7: What a financial bubble looks like
Thisisthebiggestinhistory
*China’s figure is based on total social financing (TSF) credit, while India’s figure comes from Autonomous India TSF, which captures bank and non-bank credit. US, EU and Japan data
are from The Bank for International Settlements (BIS) figures on broad credit, so as to be more comparable with China’s TSF.
Source: BIS, CEIC, Autonomous Research
Chart 8: Evidence of evergreening and extend and pretend
Untilwegetcapitalcycles,creativedestruction–Zombieswillresultinlackofclearing
Source: Wind, Autonomous Research, September 2024
NPL: Non-Performing Loans
Over the past decade, the annual flow of credit in China has averaged
29% of GDP, which is 4-7x that in other large economies
Systemwide NPL recognition falling at a time when
macro backdrop worsened
Despite a rising number of companies reporting
losses .....
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Section 2: Investment Manager’s Review
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Chart 9: China – there are structural reasons behind low consumption levels
WhymassconsumptiontrendsinChinacouldcontinuetodisappoint–incomefromassetsismeagreinChina
Source: Enodo Economics, CEIC, May 2023
So, why have anything in China? Unlike Japan in the 1990s, many of the private sector companies in China are adaptable and well
run. Valuations are reasonable, though not as cheap as the China bulls claim. As Chart 10 shows, earnings in China have consistently
disappointed and return on equity (ROE) has dropped precipitously.
Chart 10: Is China oversold – the derating has been entirely consistent with the fundamentals – is the latter
really about to turn around?
1
Source: FactSet, MSCI, RIMES, Morgan Stanley Research. Data as of 12 January 2025. Numbers are based on MSCI indices for each economy.
2
Source: IBES, DataStream, Morgan Stanley Research. Weekly data as of 9 January 2025.
Another big difference in China versus Japan in the 1990s is that many of the listed companies pay dividends or buy back shares, so
to meet our total return targets we do not need to see significant share price appreciation. The holdings in China are focused on the
best private sector companies, ones that have strong market positions in areas with secular growth and that generate good cash flow
which is being returned to shareholders. These are companies like Tencent (social media and gaming), Netease (gaming), Tencent
Music (streaming), Trip.com (travel) and in Hong Kong companies like AIA (regional insurance) and Swire Pacific (airlines, property).
In summary, we expect to remain underweight China and are structurally cautious on the market but as stockpickers, we find good
opportunities and thus are happy to own selective names.
Looking at our Cluster Two (Korea and Taiwan) the portfolio is slightly overweight in this investment area. This is primarily coming from
a material overweight in technology as we have no domestically focused stocks in either Korea or Taiwan as both economies are mature
and valuations/fundamentals for domestic stocks are unattractive. As mentioned earlier in the review section, we remain cautious on
Korean “Value-up” having heard the story of improving corporate governance in Korea multiple times over the last 30 years. Whilst not
completely sceptical, the proof is very much in the pudding.
Household disposable income and consumption:
international comparison
P/B vs. ROE for global equities – Japan & China ROE
are heading in opposite directions; for the US and
India the debate is on valuation
1
MS EPS base-case forecasts for
MSCI China at Dec-24 and Dec-25
2
Net income from assets as % of GDP:
China-US comparison
Section 2: Investment Manager’s Review
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Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Technology holdings have now been reduced to those we see as key long-term structural winners given industry changes, or those that
we think can take market share. This means our key technology holdings are now just in a handful of companies like TSMC (effective
monopoly in advanced nodes after Intel and Samsung failures in the foundry space), Chroma ATE (advanced chip testing), MediaTek
(market share winner in chipsets and application-specific integrated circuits), Voltronic (increased outsourcing of power supply
equipment) and ASE (requirements for more advanced chip packaging).
Cluster Three (Australia and Singapore) is an area we added to over the course of 2024 and the portfolio is now materially overweight
(vs. the Reference Index) in what is often considered the most boring part of the Asian investment universe. From your Portfolio
Managers’ perspective, boring is often good – the Australian and Singapore stock markets offer good corporate governance, lots of
dividends and reasonable earnings per share (EPS) growth (Chart 12). Despite this, they are nearly always considered the least attractive
markets by sell-side strategists (right-hand graph in Chart 12) who fixate on top-line growth and false hopes of stimulus and reform
(China and Korea).
Technology is the overriding focus of Cluster Two. This time last year, we were bullish on technology and significantly overweight. Over
the course of 2024, we have reduced exposure. Partly by taking profits from some of our technology stocks that have done well on AI
hopes and are now trading above or close to reasonable valuations, but also by substantially reducing Samsung Electronics, which now
looks decidedly challenged and return on invested capital negative.
At this point, we are increasingly cautious on AI-themed stocks. We worry that we will see a hiatus in AI capital expenditure (the driver
of Taiwan AI stocks) at some point as the reality of AI use cases and monetisation needs to catch up with the huge expenditure being
undertaken by the likes of Microsoft, Amazon and Alphabet. As Chart 11 shows, on the left-hand chart, semiconductor sales have
tended long-term to grow pretty much at a steady 7% per annum level (with some cyclicality for new product cycles like PCs in the
1990s, smartphones in 2005-08) and we don’t see AI applications suddenly changing this very consistent long-term trend. As the right-
hand chart shows, any disappointment in semiconductor sales is likely to feed through to falling prices in Taiwan stocks.
Chart 11: We do not see AI applications materially altering long-term semiconductor growth rates and the
base effect means the year-on-year comparable looks more challenging for semiconductor stocks in Taiwan –
time to take some profits?
Source: CLSA forecasts, SIA/WSTS, August 2024
MSCI Taiwan (US$, year-on-year % change, pushed forward
3 months, right hand side)
Globalsemisales(US$,year-on-year%change,lefthandside)
World semiconductor manufacturer sales (monthly,
US$bn, log scale)
Global semiconductor manufacturer sales versus
MSCI Taiwan momentum
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
24
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Our focus in Australia and Singapore is principally on dividend stocks, and we are still finding attractive opportunities in this space
(Chart 13). The Company is called the “Schroder Asian Total Return Investment Company plc” as we are agnostic whether our total
return comes from a 1% dividend and 8% capital gain or a 7% dividend and 2% capital gain – key is that stocks can meet our total
return hurdles. We often tend to feel in Asia many investors forget the importance of dividends and total returns, instead just focusing
on top-line growth and themes – much to their peril in places like China and, we believe going forward, India.
Chart 13: Given increasing caution on many parts of the market – we are happy to rotate back to more
defensive stocks in Singapore and Australia
Source: CLSA, MSCI, Bloomberg, August 2024
Chart 12: Australia/Singapore: We like the structural outlook, especially as sell side strategists do not!
Why payout ratios matter – better
corporate governance, better EPS growth
better mean better overall returns
1
For stocks in MSCI AC Asia Pacific ex
Japan index, EPS growth correlates
positively to payout ratios
2
High dividend-yielding Asian markets
are the least preferred by sell-side
strategists in 2024
3
40 .0
45 .0
50 .0
55 .0
60 .0
65 .0
70 .0
75 .0
80 .0
85 .0
10 .0 20 .0 30 .0 40 .0 50 .0 60 .0 70 .0 80 .0
CLSA Corporate governance score
Payout ratio (%)
Australia
Singapore
Taiwan
Malaysia
Thailand
Hong Kong
India
China
Indonesia
Philippines
Korea
-90
-60
-30
0
30
60
90
120
150
25 45 65
Subsequent Real EPS Growth (%)
Payout ratio (%)
Australia
China
HK
Korea
Taiwan
Singapore
Malaysia
Thailand
Indonesia
Philippines
India
- 2 0%
0%
20%
40%
60%
80%
100%
0.00 1.00 2.00 3.00 4.00 5.00
% sell-side strategists who are overweight
Dividend yield (%)
Why payout ratios matter – better
corporate governance, better EPS growth
better mean better overall returns
1
For stocks in MSCI AC Asia Pacific ex
Japan index, EPS growth correlates
positively to payout ratios
2
High dividend-yielding Asian markets
are the least preferred by sell-side
strategists in 2024
3
40 .0
45 .0
50 .0
55 .0
60 .0
65 .0
70 .0
75 .0
80 .0
85 .0
10 .0 20 .0 30 .0 40 .0 50 .0 60 .0 70 .0 80 .0
CLSA Corporate governance score
Payout ratio (%)
Australia
Singapore
Taiwan
Malaysia
Thailand
Hong Kong
India
China
Indonesia
Philippines
Korea
-90
-60
-30
0
30
60
90
120
150
25 45 65
Subsequent Real EPS Growth (%)
Payout ratio (%)
Australia
China
HK
Korea
Taiwan
Singapore
Malaysia
Thailand
Indonesia
Philippines
India
- 2 0%
0%
20%
40%
60%
80%
100%
0.00 1.00 2.00 3.00 4.00 5.00
% sell-side strategists who are overweight
Dividend yield (%)
Why payout ratios matter – better
corporate governance, better EPS growth
better mean better overall returns
1
For stocks in MSCI AC Asia Pacific ex
Japan index, EPS growth correlates
positively to payout ratios
2
High dividend-yielding Asian markets
are the least preferred by sell-side
strategists in 2024
3
40 .0
45 .0
50 .0
55 .0
60 .0
65 .0
70 .0
75 .0
80 .0
85 .0
10 .0 20 .0 30 .0 40 .0 50 .0 60 .0 70 .0 80 .0
CLSA Corporate governance score
Payout ratio (%)
Australia
Singapore
Taiwan
Malaysia
Thailand
Hong Kong
India
China
Indonesia
Philippines
Korea
-90
-60
-30
0
30
60
90
120
150
25 45 65
Subsequent Real EPS Growth (%)
Payout ratio (%)
Australia
China
HK
Korea
Taiwan
Singapore
Malaysia
Thailand
Indonesia
Philippines
India
- 2 0%
0%
20%
40%
60%
80%
100%
0.00 1.00 2.00 3.00 4.00 5.00
% sell-side strategists who are overweight
Dividend yield (%)
1
Source: FactSet, MSCI, Schroders, July 2019
2
Source: Factset, MSCI, Schroders, December 2022
3
Source: Factset, MSCI, Schroders
Why payout ratios matter – better
corporate governance, better
EPS growth mean better overall
returns
1
Asia Pacific dividend payout ratios
(latest versus 10-year average)
Asia Pacific versus US shareholder yield
For stocks in MSCI AC Asia Pacific
ex Japan index, EPS growth
correlates positively to payout
ratios
2
High dividend-yielding Asian
markets are the least preferred by
sell-side strategists in 2024
3
Section 2: Investment Manager’s Review
25
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
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Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
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Chart 15: Australia has a better macroeconomic outlook than most of Asia
Positivedemographicandagoodinstitutionalframework=Apositiveoutlook
Strong, skilled population growth and good infrastructure means the Australian economy has better long-term growth
prospects than many other Asian countries.
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
Au strali a
Phi lippi nes
Malaysia
Indi a
Canada
Indonesia
NZ
US
UK
Forecast population growth per annum (till 2030)
1
World Economic Forum – The Global Competitiveness Report
2
Strong, skilled population growth and good infrastructure means the Australian economy has better long-term growth
prospects than many other Asian countries.
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
Au strali a
Phi lippi nes
Malaysia
Indi a
Canada
Indonesia
NZ
US
UK
Forecast population growth per annum (till 2030)
1
World Economic Forum – The Global Competitiveness Report
2
1
Source: Australian Government 2023 Intergenerational Report; The World Bank population estimates and projections.
2
Source: World Economic Forum, The Global Competitiveness Report 2019
In Singapore, the Company is primarily focused on financials. We continue to favour Singapore banks given their regional footprints,
good transparent management, and the tailwind they enjoy as the wealth management centre of Asia moves from Hong Kong to
Singapore. As Chart 16 shows, these are businesses that are very well positioned and continue to compound nicely.
In Australia we are not just focused on yield; we also own a selection of global/US centric companies in the healthcare and industrial
space like ResMed, Brambles, CSL, Aristocrat, Cochlear, and James Hardie. Valuations in Australia are reasonable given the quality of the
companies and the strong positioning many businesses have in their respective segments. As Chart 14 shows, the sluggish domestic
economy in Australia has turned sentiment cautious, and this has led to a moderate derating. Structurally, with strong demographics,
good rule of law, and excellent social frameworks, we are positive long-term on the Australia economy and expect it to grow faster than
most Asian economies in the medium-term (Chart 15).
Chart 14: Bad news in prices? – Australian brokers are gloomy. Valuations now look reasonable to us
Source: CLSA, IBES, Refinitiv, August 2024
1
Cyclically adjusted price earnings
Broker buys less holds and sells as
% of total recommendations
Strong, skilled population growth and good infrastructure means the Australian
economy has better long-term growth prospects than many other Asian countries.
Forecast population growth per annum
(till 2030)
1
World Economic Forum – The Global
Competitiveness Report
2
Australia CAPE
1
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
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Chart 16: What do we like: Singapore banks
“Boring compounders” with good returns and interesting wealth opportunity
This brings us to our last cluster, the genuine Asian emerging stock markets: India and ASEAN. Looking at India first, the positive story
of improving economic potential based on better infrastructure, digitisation of the economy and reduction of red tape has been widely
touted and has genuine validity. It is also true that India, geopolitically is in a better place than many countries, being neither obviously
aligned to the USA or China, and being a very small exporter of goods, it is less vulnerable to tariffs. However, for all the positives,
structural impediments remain whether it is an education system that for the majority is poor, difficult business conditions and low
levels of female participation in the workforce (many professions are effectively still restricted to men). It is also clear that the benefits
of growth are being garnered by the few in India, not the majority. This is why Prime Minister Modi did poorly in the 2024 elections and
also why overall consumer confidence is falling and consumption in most categories sluggish (chart 17).
Well-positioned to take advantage
of blossoming wealth
management opportunity
1
Oligopolistic industry structure
underpins good sustainable
returns
1
Have delivered strong total return
over time
2
75
150
225
300
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Singapore banks total return $,
indexed
0
500
1,000
1,500
2,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Singapore wealth management SG$m
0.60%
0.80%
1.00%
1.20%
1.40%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1H23
Return on assets
Well-positioned to take advantage
of blossoming wealth
management opportunity
1
Oligopolistic industry structure
underpins good sustainable
returns
1
Have delivered strong total return
over time
2
75
150
225
300
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Singapore banks total return $,
indexed
0
500
1,000
1,500
2,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Singapore wealth management SG$m
0.60%
0.80%
1.00%
1.20%
1.40%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1H23
Return on assets
Well-positioned to take advantage
of blossoming wealth
management opportunity
1
Oligopolistic industry structure
underpins good sustainable
returns
1
Have delivered strong total return
over time
2
75
150
225
300
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Singapore banks total return $,
indexed
0
500
1,000
1,500
2,000
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Singapore wealth management SG$m
0.60%
0.80%
1.00%
1.20%
1.40%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1H23
Return on assets
1
Source: Company financials;
2
Source: Refinitiv;
3
United Overseas
DBS UOB
3
OCBC DBS UOB
3
OCBC
Chart 17: High food prices and low income growth are sapping confidence and consumer expenditure in India
Source: CEIC, Reserve Bank of India (RBI), Macquarie Research, December 2024
Source: Company data, Macquarie Research, December 2024
DBS UOB
3
OCBC
Oligopolistic industry structure
underpins good sustainable
returns
1
RBI Consumer Confidence Index Consumer staples sales growth
rolling 4Q Y/Y
Well-positioned to take
advantage of blossoming wealth
management opportunity
1
Have delivered strong total return
over time
2
Section 2: Investment Manager’s Review
27
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Chart 18: Consensus is forecasting aggressive earnings growth in India, we expect the historic trend of
consistent downgrades to exuberant earnings expectation to resume
Source: Factset, Macquarie Research, December 2024
When you combine the potentially disappointing earnings backdrop with high valuations (Chart 19), which have been driven up by
very active levels of domestic retail participation often via “thematic” funds, we see material risks to the Indian market. It is perhaps not
surprising that insider selling and private equity exits are accelerating, historically this has been timed at market peaks (Chart 20).
Private capital expenditure and foreign direct investment also continue to disappoint versus expectations. This is not to say the general
environment in India has not improved; it has. However, not to the extent the bulls proclaim, and we expect the economic numbers will
disappoint compared to high expectations.
This, we think, leaves the stock market vulnerable. Indian brokers and domestic investors tend to be extremely optimistic, and in
India it is often considered unpatriotic to be downbeat. The result of this is corporate earnings nearly always fail to meet consensus
expectations, as shown in Chart 18. This chart shows the trend in stockbrokers’ earnings forecasts for the Indian stock market over time
– typically earnings come in 20% or more below the initial forecasts. The exception was 2023 and 2024 as we saw a post-Covid earnings
rebound (financial year end in India is March). We are currently seeing significant downgrades to 2025 and 2026 earnings and expect
this to continue given the weaker-than-expected economy.
Consensus earnings expectations – India
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
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Chart 19: Across measures, both absolute and relative, forward multiples in India are 2+ standard deviations
above the long-period average; how long can the liquidity party continue?
India vs Emerging Markets (EM) vs World: Price Earnings rolling 2 year forward
Source: Factset, Macquarie Research, December 2024
Chart 20 – Primary equity activity is running at the fastest pace on record, historically peaks in issuance are
typically coincident with peaks in equity market momentum
India total issuance* (US$bn) versus equity market momentum
*Note: IPOs+additional
Source: CLSA, Bloomberg, MSCI, August 2024
Section 2: Investment Manager’s Review
29
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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This is not to say we can find nothing to own in India; we selectively like private sector banks where valuations are reasonable,
healthcare and travel-related names. Overall, however, India is the biggest single underweight in the portfolio, and we would need to
see a material correction (probably driven by an exit of domestic retail money) for us to look to move overweight.
The smaller ASEAN stock markets (Thailand, Indonesia, the Philippines, Malaysia, Vietnam) had a poor close to 2024 as they are deemed
more vulnerable to higher US interest rates and a strong dollar. Economically, most are ticking along at reasonable growth levels (3%
to 5%) but at a pace that, like India, is below expectations, and again like India, the consumer is facing pressure from rising food prices
and higher interest rates. Animal spirits in the main are very much lacking.
Unlike India, however, this increasingly looks to be reflected in stock market valuations. As shown in Chart 21, in Indonesia and the
Philippines, despite a good rebound in ROE from Covid lows, stock markets have remained moribund (as proxied by price to book or
PB).
The Company has reasonable positions across the smaller stock markets in ASEAN, mostly focused on the financial and consumer
sectors. The spectre of Trump 2.0 and a strong dollar is likely to mean stock markets in ASEAN remain under pressure near-term and
higher interest rates are expected to be a headwind for both economies and corporate earnings. With valuations close to historic lows,
we do find good stock-level opportunities in the region, and thus see this as one area of potential positive surprise in 2025 if current
headwinds were to ease.
We hope this report has provided a reasonably comprehensive review on performance and the positioning of the Company. As ever,
Asia remains a large, a fascinating and disparate region and we see plenty of interesting investment opportunities at the current time.
To recap on our previous comments: we enter 2025 in an uncertain market outlook for Asian stock markets; however a lot of this looks
to be reflected in valuations so, if we avoid the worst of Trump 2.0 and China risks ease, we see the prospect for the Company to make
good total returns in the coming year.
Robin Parbrook and Lee King Fuei
Portfolio Managers
Schroder Investment Management Limited
18 March 2025
For illustrative purposes only and does not constitute to any recommendation to buy or sell the above-mentioned security/sector/country.
Please note that the value of investments and the income from them can go down as well as up and investors may not get back the amounts
originally invested.
Chart 21: ASEAN – Improving fundamentals not reflected in valuation
Source: Bloomberg
The Philippines Indonesia
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Section 2: Investment Manager’s Review
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Taipei 101, Taipei, Taiwan
Section 2: Investment Manager’s Review
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Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Top Ten Investments
At 31 December 2024
Market: China
Sector: Communication Services
Portfolio exposure: £26.1m
% of portfolio: 5.0%
Market: Taiwan
Sector: Information Technology
Portfolio exposure: £61.3m
% of portfolio: 11.7%
Market: Taiwan
Sector: Information Technology
Portfolio exposure: £17.4m
% of portfolio: 3.3%
Market: Singapore
Sector: Financials
Portfolio exposure: £17.1m
% of portfolio: 3.3%
2
1
3 4
Tencent
TSMC
MediaTek DBS Group
TSMC is a Taiwanese provider of
semiconductor manufacturing services
and the world’s largest logic chip contract
manufacturer. Its dominant position, in the
manufacturing of the most cutting-edge
chips, is a result of a long track record of
research and development driven innovation.
TSMC’s customers include many of the world’s
most advanced chip design companies,
for applications ranging from smartphone
processors to the most advanced AI chips.
Tencent is China’s biggest internet
company, with leading positions in mobile
gaming, online advertising and mobile
payments. Its WeChat app is the leading
instant messaging app in China, and is a
key platform for other features, such as
payments and social media content, and
third-party services accessed through “mini-
programs” on the platform. In addition to
its own operations, Tencent is a significant
shareholder in several other prominent
internet companies, in China and abroad.
MediaTek is a Taiwanese company
engaged in the design and distribution of
semiconductor chips. Its products focus on
mobile connectivity, for example 5G mobile
communication chips, as well as Bluetooth
and Wi-Fi chips, and are mainly used in
mobile phones, digital TVs, PCs, home
appliances, wearable devices and Internet
of Things devices.
DBS Group is a financial services
group headquartered in Singapore. Its
services include retail and corporate
banking, wealth management, and
capital markets solutions. Renowned
for its digital innovation and customer-
centric approach, DBS Group has been
recognised as one of the world’s best
digital banks. The bank operates across
key markets in Asia, including China, India,
Indonesia, and Taiwan.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
32
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•
Market: India
Sector: Financials
Portfolio exposure: £11.7m
% of portfolio: 2.2%
Market: India
Sector: Financials
Portfolio exposure: £13.7m
% of portfolio: 2.6%
Market: Australia
Sector: Consumer services
Portfolio exposure: £11.1m
% of portfolio: 2.1%
Market: Hong Kong
Sector: Financials
Portfolio exposure: £12.8m
% of portfolio: 2.5%
Market: The Philippines
Sector: Industrials
Portfolio exposure: £11.0m
% of portfolio: 2.1%
Market: Indonesia
Sector: Financials
Portfolio exposure: £12.5m
% of portfolio: 2.4%
8
5
9
6
10
7
ICICI Bank
HDFC Bank
Aristocrat Leisure
AIA
International Container
Terminal Services
Bank Mandiri
ICICI Bank is an Indian financial services
provider, offering a range of banking
services and other financial products,
including retail banking, wholesale
banking and insurance. It is one of India’s
leading private sector banks, with around
6,000 branches. India is a relatively
underpenetrated market for financial
services.
HDFC Bank is an Indian financial services
provider, offering banking, insurance
and mutual funds among other financial
products. Following its merger with HDFC
Ltd, the non bank financial company,
it is now among India’s largest private
sector financial companies, serving
over 90 million customers through both
traditional and digital channels. India is
a relatively underpenetrated market for
fi
nancial services.
Aristocrat Leisure is a global leader in
gaming technology, specialising in slot
machines, digital gaming, and mobile
social casinos. The company engages in
both land-based and digital businesses,
and commands a strong market position
given its innovative content and superior
game design, driving solid recurring
revenue from both land-based and
digital gaming. The dominant position
and superior product innovation of
the company should also enable it to
capitalise on the longer-term trend of the
growing legalisation of online gambling
over time.
AIA is an insurance company, providing life
insurance, accident and health insurance
and savings plans, as well as financial
products and services to corporate
clients. Based in Hong Kong, the company
operates in a wide range of markets and
has established its leadership positions in
key markets within the Asia Pacific region.
Its wide Asian footprint and strong
execution should continue to support
long-term business growth.
International Container Terminal Services
is one of the largest port operators in
emerging markets. This remains one
of the most impressive management
teams in ASEAN (historically navigating
its way through different cycles well)
and its long-term returns on invested
capital have been robust. The company
has demonstrated superior yield
management, with further upside
levers in key terminals through capacity
expansion and new value-added services
which should continue to support strong
earnings and dividend growth over time.
Bank Mandiri is one of Indonesia’s largest
banks, serving both retail and corporate
customers. Established in 1998 as part
of a restructuring program for four
government-owned banks, Bank Mandiri
remains majority government-owned. It
also offers other financial services, such
as insurance and securities brokerage.
Indonesia is a relatively underpenetrated
market for financial services.
Section 2: Investment Manager’s Review
33
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Investment Portfolio
At 31 December 2024
Fair
Value
£’000
Portfolio
Exposure
£’000
Portfolio
Exposure
%
1
Taiwan
TSMC 61,317 61,317 11.7
MediaTek 17,369 17,369 3.3
ChromaATE 9,164 9,164 1.7
ASETechnology 7,552 7,552 1.4
Voltronic Power Technology 6,379 6,379 1.2
Nien Made Enterprise 5,623 5,623 1.1
Eclat Textile 4,655 4,655 0.9
Merida Industry 4,501 4,501 0.9
Advantech 3,597 3,597 0.7
King Vuan Electronics 2,080 2,080 0.4
Total Taiwan 122,237 122,237 23.3
Australia
AristocratLeisure 11,129 11,129 2.1
ResMed 10,569 10,569 2.0
CSL 8,167 8,167 1.6
Brambles 7,629 7,629 1.4
MedibankPrivate 7,053 7,053 1.4
Cochlear 6,606 6,606 1.3
BHP Billiton
2
6,535 6,535 1.3
Seek 5,279 5,279 1.0
Orica 5,261 5,261 1.0
James Hardie Industries 4,883 4,883 0.9
Incitec Pivot 3,519 3,519 0.7
Bluescope Steel 2,984 2,984 0.6
Total Australia 79,614 79,614 15.3
Mainland China
Tencent
3
26,151 26,151 5.0
ContemporaryAmperexTechnology 8,136 8,136 1.6
NetEase
3
7,089 7,089 1.4
Trip.com
3
6,363 6,363 1.2
Shenzhou International Group
3
6,222 6,222 1.2
NewOrientalEducation&TechnologyGroup(ADR)
4
5,995 5,995 1.1
TencentMusicEntertainment(ADR)
4
(CFD) (213) 5,617 1.1
Meituan Dianping
3
5,038 5,038 0.9
Sands China
3
4,621 4,621 0.9
Total Mainland China 69,402 75,232 14.4
India
HDFC Bank 13,719 13,719 2.6
ICICI Bank 11,661 11,661 2.2
ApolloHospitalsEnterprise 10,090 10,090 1.9
MakeMyTrip
4
9,865 9,865 1.9
Bharat Electronics 6,224 6,224 1.2
Tata Consultancy Services 5,935 5,935 1.1
Five Star Business Finance 4,727 4,727 0.9
Hyundai Motor India 936 936 0.2
Total India 63,157 63,157 12.0
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
34
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Fair
Value
£’000
Portfolio
Exposure
£’000
Portfolio
Exposure
%
1
Hong Kong (SAR)
AIA 12,807 12,807 2.5
SwirePacific 10,587 10,587 2.0
Techtronic Industries 9,405 9,405 1.8
Galaxy Entertainment 8,000 8,000 1.5
Total Hong Kong (SAR) 40,799 40,799 7.8
Singapore
DBS Group 17,140 17,140 3.3
Singapore Exchange 8,713 8,713 1.7
United Overseas Bank 7,260 7,260 1.4
Sheng Siong 5,557 5,557 1.1
Total Singapore 38,670 38,670 7.5
Philippines
International Container Terminal Services 10,996 10,996 2.1
CenturyPacificFood 6,423 6,423 1.2
BDOUnibank 6,042 6,042 1.2
SM Investments 6,012 6,012 1.2
Wilcon Depot 5,125 5,125 1.0
AyalaLand 3,962 3,962 0.7
Total Philippines 38,560 38,560 7.4
Indonesia
Bank Mandiri 12,479 12,479 2.4
SumberAlfariaTrijayaTbkPT 5,158 5,158 1.0
Total Indonesia 17,637 17,637 3.4
South Korea
Samsung Electronics 10,296 10,296 2.0
SK Hynix 6,307 6,307 1.2
Total South Korea 16,603 16,603 3.2
Vietnam
FPT 9,205 9,205 1.7
Gemadept 4,171 4,171 0.8
Total Vietnam 13,376 13,376 2.5
Thailand
Bangkok Dusit Medical Services 6,664 6,664 1.3
Total Thailand 6,664 6,664 1.3
United Kingdom
Rio Tinto (CFD) (41) 5,676 1.1
Total United Kingdom (41) 5,676 1.1
United States
Las Vegas Sands (CFD) 30 4,014 0.8
Total United States 30 4,014 0.8
Total Investments (including CFDs)
5
506,708 522,239 100.0
Section 2: Investment Manager’s Review
35
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Fair
Value
£’000
Portfolio
Exposure
£’000
Portfolio
Exposure
%
1
Derivative Financial Instruments
Index Put Options
NIFTYMPutOption24500February2025 505
Total Index Put Options
6
505
Forward Currency Contract
7
458
Total Investments and Derivative Financial Instruments – Portfolio Exposure 522,239 100.0
Total Investments and Derivative Financial Instruments – Fair Value 507,671
Investments are classified by the Manager in the region or country of their main business operations or listing. The portfolio exposure
indicates the impact on market price movements resulting from the ownership of shares and derivative instruments.
Fair value represents the true value of the portfolio, which is reflected on the balance sheet. In the case of holding a CFD, the fair value
reflects the profit or loss generated by the CFD since its inception, based on the movement of the underlying share price. However,
when the Company solely holds shares, both the fair value and the portfolio exposure align.
Highlighted stocks are the twenty largest investments, which by value account for 55.5% (2023: 56.8%).
1
Portfolio exposure is expressed as a percentage of total investments and financial derivative instruments.
2
Listed in the UK.
3
Listed in Hong Kong (SAR).
4
Listed in the USA.
5
Comprises the following:
Fair
Value
£’000
Portfolio
Exposure
£’000
Equities 500,937 500,937
AmericanDepositaryReceipts(ADR) 5,995 5,995
CFDs (224) 15,307
Total Investments (including CFDs) 506,708 522,239
6
The options give downside protection to 2.08% total investments.
7
Comprises a single contract to purchase USD27.82 million for CNH200 million, for settlement on 16 January 2025. The contract is
valued at fair value, being the cost of closing out the contract at the balance sheet date.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
36
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Investment Process
Investment philosophy
Translating philosophy into process
We believe that Asian stock
markets are inefficient and
provide strong potential for
adding value through active
fund management.
Source:Schroders.Forillustrativepurposesonlyandshouldnotbeviewedasarecommendationtobuyorsell.
We believe that this value
is best extracted using a
fundamental, bottom-up stock
selection approach.
The durability of earnings
and the alignment of our
interests with management
and major shareholders are key
considerations. We seek to buy
quality companies at the right
price.
We believe that applying
a systematic, disciplined
approach, with a strong team
culture, increases our ability to
add value.
A disciplined investment process, applied systematically by an
experienced team, is important for adding value over the long-
term. Schroders’ investment process is informed by their beliefs
about Asian markets, based on extensive experience gained
investing in the region for over 50 years.
These beliefs, and their implications, result in stock selection
being placed at the heart of the Company’s investment approach,
as explained in the diagram below:
Philosophical beliefs Deduction Process
Asian markets are less
well researched
Add value from stock
selection by consistent
application of bottom-up
process
• Disciplined long-term stock analysis
by a large, on-the-ground team of
experienced investment professionals
covering Asia Pacific ex Japan
• Understanding of business value
Asian stocks have
higher specific risks
Seek quality – at the right
price
• Focus on superior or improving return
on invested capital (ROIC) over time
• Sustainability and durability of
earnings are key considerations
• Corporate governance focus
Asian markets are
short-term and volatile
Seek long-term, not short-
term valuation anomalies
• Take a long-term time horizon
• Exploit opportunities created by
short-term volatility
Source:Schroders.Forillustrativepurposesonlyandshouldnotbeviewedasarecommendationtobuyorsell.
Section 2: Investment Manager’s Review
37
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
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Stock research
The key input into the Investment
Manager’s stock selection decisions is the
fundamental research carried out by the
analyst team, the majority of which is done
using internal research tools and valuation
models.
1
With a universe of around 5,000 potential
names to choose from, in what has
historically been a volatile region, the
Investment Manager has a bias towards
‘quality’ companies. The analysts look to
identify those companies which are most
likely to be able to grow shareholder
value over the long term, by making
assessments of the financial and non-
financial (including sustainability) factors
which influence company returns. The
analytical focus is on the future trend in
a company’s ROIC relative to its weighted
average cost of capital (WACC), in the
belief that this reflects the attractiveness
and sustainability of the business model
and serves as a predictor of long-term
shareholder returns.
Analysts spend much of their time meeting
with companies in their sectors, as well
as with industry experts and colleagues,
so that they can evaluate the “moats”,
or true competitive advantage, around
the businesses they are analysing and
ultimately be in a position to make a
recommendation on companies that could
generate superior shareholder value over
the long-term.
The output of this work is usually in the
form of research notes and company
models, as well as standard data points – a
fair value and recommendation grade, its
Shareholder Return Classification (“SRC”)
which includes an assessment of the
company’s return profile as described
above, and an ESG appraisal and score.
Portfolio construction
With input from the team of research
analysts, the Portfolio Managers generate
stock ideas by combining their own
research (for example, by undertaking
research visits and meetings with company
management) and by drawing on a
number of other sources including other
investment professionals within Schroders,
quantitative screens, and external research
providers.
Using all of these inputs, the Portfolio
Managers will decide which stocks to
hold, and at what weightings. In doing so,
they will consider all the outputs from the
analysts’ work (such as the upside to fair
value), the level of conviction they have in
the investment thesis and any identified
risks (including those relating to ESG)
relative to the rest of the opportunity set.
The primary objective of this process is to
create a portfolio with an appropriate level
of stock specific risk as the primary driver
of returns.
While the portfolio construction process
is primarily driven by bottom-up stock
selection, there is also a top-down
strategic and tactical hedge overlay
process, carried out on a monthly basis,
which combines the output of in-house
quantitative models and the qualitative
views of the Portfolio Managers.
The purpose of this “top-down overlay” is
to identify and adjust for any unwanted
systematic risks (or market risks) which
have resulted from the bottom-up process.
Top-down factors looked at in this process
may include macroeconomic conditions,
inflation and interest rate dynamics,
politics/geopolitics, aggregate market
valuations and measures of investor
sentiment. This allows the Portfolio
Managers to construct the portfolio using
the most attractive bottom-up ideas,
while helping to provide some downside
protection through reducing specific
market risks and lowering overall return
volatility. They will also harness Schroders’
proprietary risk management systems
to provide a quantitative view of the
characteristics of the portfolio.
This results in a relatively diversified
portfolio, typically with a ‘quality’ bias.
Investment team
A key strength of the Investment Manager
is its team of investment professionals
based in the region. The two Portfolio
Managers, who themselves have well over
five decades of investment experience
between them, are supported by a team of
45 equity analysts based across 6 offices in
Asia Pacific ex-Japan, who have an average
of over 17 years’ investment experience
2
.
Being based in the region means that the
analysts are in regular direct contact with
the companies which they are covering,
with the team carrying out over 2,700
company contacts per year
3
. This regular
contact allows the team to gain a thorough
understanding of a company’s business
model and management culture, the key
issues they are facing and their strategies
to navigate an ever-changing business
environment. Moreover, since the local
investors in each country are usually the
key owners of the local markets, being
present on the ground enables the
Investment Manager to understand how
those major local investors perceive and
value companies.
It is this knowledge base, paired with the
expertise of the Investment Manager’s
investment professionals, which adds
value to the bottom-up approach to stock
selection. The locally based analyst team
is supplemented by other resources
across the Schroders group, including the
UK-based Sustainable Investment Team
and Investment Insight Unit, as well as
other equity teams focused on global and
emerging markets.
1
ThestockresearchprocessdescribedherecoversthatundertakenbytheteamoflocallybasedAsiaexJapananalysts.Thedetailofresearchinotherregions
whereanalystsreportlocally(e.g.Australia,India)maydiffer,butisunderpinnedbythesamebroadapproach.
2
TeaminformationasatDecember2024.The45ex-JapananalystsincludeSchroders’localspecialistteamofequityanalystsinSydney,aswellasajoint-venture
teamofIndianequityanalystsatAxisAssetManagement(AxisAMC)inMumbai.
3
Calendar year 2024. Source: Schroders.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 2: Investment Manager’s Review
38
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
ESG Integration
Integration of ESG into the
investment process
1
It is important to note that the Company
does not have a specific ESG/sustainability
orientation, or target outcome. The
Company’s investment objective can be
found in the Strategic Report on page 45.
The approach of the Manager is to
incorporate into its decision-making a
thorough assessment of management
quality, environmental, social and
governance factors, whether implicitly
or explicitly. The Manager believes that
integrating an analysis and evaluation
of ESG factors in the security valuation
and selection process helps to enhance
and protect long-term shareholder value,
and that the appraisal of non-financial
factors, including ESG considerations,
contributes to a better understanding of a
company’s risk characteristics and return
potential. Assessing the durability of a
company’s returns and financial position
has therefore always been at the core of
the Manager’s research and investment
decisions in Asia.
Schroders’ sustainability practice has a
history of over 20 years. Today a team of
more than 40 dedicated members of the
Sustainable Investment team (as at 31
October 2024) develop proprietary ESG
tools, such as CONTEXT
TM
and SustainEx
TM
which support individual investment teams
including the Asian equities team. The
carbon footprint of the companies and
the portfolio are monitored over time and
the proprietary SustainEx
TM
tool measures
positive and negative externalities
generated by the companies.
Asia Context
TM
, which is the principal
tool employed for the Manager’s ESG
analysis as it pertains to the Company’s
investments, captures the Manager’s
ESG analysis in one template using a
stakeholder-based framework. It provides
a clear and broad roadmap on the issues
requiring engagement, helps refresh
the team’s focus on ROIC and enhances
appreciation of the downside and upside
risks to a company’s business model.
Source: Schroders.
The context framework:
Understanding how a company manages it relationships with stakeholders
Environment
Have you put in place an energy
transition plan? Are you managing
operating impacts?
Regulators
How competitive is your market? Are
you paying a fair rate of tax?
Suppliers
How exposed is your supply chain to
disruption risks? How strong are your
supplier relationships?
Customers
How is your brand perceived? What’s
in your produce pipeline?
Employees
How do your employees perform?
How motivated is your team?
Communities
What support do you offer your local
community? Have you committed to
protect human rights?
Active ownership
Schroders has a long history of active
ownership, including engagement with
companies on ESG related matters, for the
past two decades.
Direct company contact is an important
component of the initial due diligence
and ongoing monitoring process. These
regular engagements form an important
aspect of the Manager’s role as a steward
of clients’ capital and allows deployment
of capital in businesses with long-term
sustainability of returns and shareholder
value creation.
Corporate Governance analysts in the
Sustainable Investment team will also
work alongside investors and internal
compliance and legal teams to vote all
proxies where possible, and to ensure the
Manager’s voting activities comply with its
ESG policy.
To enhance the Asia team’s ESG expertise,
two members of the Sustainable
Investment team are based in the region,
directly supporting the Asian capability
and ensuring they are kept fully informed
of the relevant output of the Sustainable
Investment team in London.
During the year, Sustainable Equity Analyst
on the Asia team brought additional
insight and perspective to ESG analysis
and engagement.
1
TheaboveESGframeworkcoversinvestmentsincompaniesresearchedbyourteamoflocallybasedAsiaexJapananalysts.ThedetailofESGcoverageinother
regionswhereanalystsreportlocally(e.g.Australia,India)maydiffer,butisunderpinnedbythesamebroadapproach.
Section 2: Investment Manager’s Review
39
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
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ESG analysis impacts the
investment process in four ways.
1) Initial screening – ESG helps
determine which companies are
considered to be investable as part of
an initial screening, which is in addition
to Schroders’ group-wide exclusions.
1
2) Durability of earnings – ESG analysis
helps the investment team understand
the impact ESG externalities may have
on the future earnings power of the
business and the ROIC and SRC of the
company.
3) Fair Value and recommendation –
ESG is an indirect and direct input into
our fair value estimate of a company.
Indirect, to the extent that a company’s
SRC may influence the assumptions
used in establishing the fair value
estimate of a company; and direct, to
the extent that the Manager may apply
an additional explicit discount/premium
to that fair value estimate.
4) Portfolio construction – ESG helps
shape portfolio construction and may
influence how portfolio managers
size positions. For example, poor ESG
performance or heightened ESG risks
may result in a decision to underweight
a security, hold a smaller position size
or avoid an investment completely.
There is no automatic rule – each
investment opportunity is assessed
on a case-by-case basis, with the focus
on the materiality of ESG factors on a
company’s valuation and risk profile.
In summary, ESG analysis helps determine
which companies are looked at, how the
Manager assesses their durability and,
hence, how they are valued. And while
company valuations ultimately drive
portfolio construction, ESG insights play
a role in the investment process and may
influence how portfolio managers size
positions within a portfolio. Furthermore,
the Manager’s ESG analysis is broad-
reaching and is not only concerned with
the potential downside risks that are
identified, but also the upside return
implications for stocks in which the
Company invests.
The table below shows the Manager’s
engagement in respect of portfolio
holdings and voting:
As at
31 December
2024
As at
31 December
2023
Shareholder meetings voted at 68 73
Numberofproposalsvotedon 641 606
Numberofvotesagainstmanagement 47 56
Votes against management (%) 7.3 9.2
Engagements encompass all instances where we cover ESG-specific issues with a company, guided by our Engagement Blueprint. We
document these engagements in our proprietary platform, Active IQ, allowing us to monitor progress based on a milestone approach.
Where the Manager voted against management on behalf of the Company, in most cases, during 2024, these votes related to the
board (the election of directors and their independence), capital management (where proposals are not considered in the best interests
of shareholders), and compensation (concerns around remuneration levels and alignment with shareholders).
1
Schroders applies group-level exclusions to all Schroders funds that are directly managed. These group-level exclusions relate to controversial weapons and
companiesthatgeneratemorethan20%oftheirrevenuesfromthermalcoalmining.Detailscanbefoundatthefollowinglink:https://www.schroders.com/en/
global/individual/about-us/what-we-do/sus.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
40
Section 2: Investment Manager’s Review
Job No: 53868 Proof Event: 36 Black Line Level: 7 Park Communications Ltd Alpine Way London E6 6LA
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Surabaya, East Java, Indonesia
41
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Job No: 53868 Proof Event: 35 Black Line Level: 10 Park Communications Ltd Alpine Way London E6 6LA
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Victoria Memorial, Kolkata, India
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 3: Strategic Report
42
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Section 3: Strategic Report
The Company 44
Stakeholder Engagement – Section 172 Report 48
Risk Report 52
Conclusion 56
43
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 3: Strategic Report
43
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Purpose, values and culture
The Company’s purpose is to create
long-term shareholder value.
The Company’s culture is driven by its
values: transparency; engagement; and
rigour, with collegial behaviour and
constructive challenge at Board level.
The values are all centred on achieving
returns for shareholders in line with
the Company’s investment objective.
The Board also promotes the effective
management, or mitigation, of the
potential risks faced by the Company.
To the extent it does not conflict with
the investment objective, the Company’s
operations are structured with regard to
all its stakeholders and takes account of
the impact of the Company’s operations
on the environment and community.
Acting with high standards of integrity and
transparency, the Board is committed to
encouraging a culture that is responsive
to the views of shareholders and its wider
stakeholders.
As the Company has no employees and
acts through its service providers, its
culture is represented by the values and
behaviour of the Board and third parties
to which it delegates certain activities.
The Board aims to fulfil the Company’s
investment objective by encouraging a
culture of constructive challenge with
all key suppliers and openness with all
stakeholders. The Board is responsible for
embedding the Company’s culture in the
Company’s operations.
The Board recognises the Company’s
responsibilities with respect to corporate
and social responsibility and engages
with its outsourced service providers
to safeguard the Company’s interests.
As part of this ongoing monitoring, the
Board receives reports from its service
providers regarding their anti-bribery
and corruption policies; Modern Slavery
Act 2015 statements; diversity policies;
and greenhouse gas and energy usage
reporting.
The Company
Business model
The Company is a listed investment trust,
that has outsourced its operations to third
party service providers.
The Board has appointed the Manager,
Schroder Unit Trusts Limited, to
implement the investment strategy and to
manage the Company’s assets in line with
the appropriate restrictions placed on it by
the Board, including limits on the type and
relative size of holdings which may be held
in the portfolio and on the use of gearing,
cash, derivatives and other financial
instruments, as appropriate.
The terms of the appointment of the
Manager are described more completely
in the Directors’ Report including
the delegation of investment management
services to the Investment Manager,
Schroder Investment Management
Limited. The Manager also promotes
the Company using its sales, PR and
marketing teams. The Board and Manager
work together to deliver the Company’s
investment objective, as demonstrated in
the following diagram.
• Set objectives, strategy
and key performance
indicators (KPIs)
• Appoints the Manager
and other service
providers to achieve
objectives
• The Investment Manager
implements the investment
strategy by following an
investment process
• Supported by strong
research and risk
environment
• Regular reporting and
interaction with the Board
The Board is focused on ensuring that:
• the Company remains attractive to
investors
• the fees and ongoing charges
remain competitive
• Marketing, PR and sales
capability of the Manager
• Support from the
corporate broker with
secondary market
intervention to support
discount/premium
management
• Portfolio and risk
management
• Achievement of KPIs
• Use of gearing
• Discount/premium and
liquidity management
through share issuance
and repurchase
SHAREHOLDER
VALUE
Board
PromotionInvestment
OversightStrategy
Competitiveness
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 3: Strategic Report
44
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Investment trust status and continuation vote
The Company’s shares are listed on the
London Stock Exchange, and the Company
is an investment trust in accordance with
section 1158 of the Corporation Tax Act
2010. It is intended that the Company will
continue to conduct its affairs in a manner
which will enable it to retain this status.
The Company is not a “close” company for
taxation purposes.
Whilst the Company’s Articles of
Association require that a proposal for
the continuation of the Company be put
forward at the Company’s AGM in 2025,
the Directors have no reason to believe
that such a resolution will not be passed
by shareholders.
KPIs
The Board reviews performance, using a number of key measures,
to monitor and assess the Company’s success in achieving its
objective. Further comment on performance can be found in the
Chair’s Statement.
Some of the KPIs used are:
• NAV performance;
• Share price performance;
• Share price discount/premium management; and
• Ongoing charges ratio.
All of the above KPIs are alternative performance measures.
Further details of these can be found on pages 111 and 112.
The performance against these KPIs is reported on page 5.
Investment objective
The Company seeks to provide a high
rate of total return through investment
in equities and equity-related securities
of companies trading in the Asia Pacific
region (excluding Japan). The Company
seeks to offer a degree of capital
preservation through tactical use of
derivative instruments.
Investment policy
The Company invests principally in a
diversified portfolio of 40-70 companies
operating primarily in Asia, including
Australasia but excluding Japan. It is
intended that the Company will have a
bias to investing in small and mid cap
companies.
Investments may be made in companies
listed on the stock markets of countries
located in the region and/or listed
elsewhere but controlled from within the
region and/or with a material exposure
to the region. The Company will focus on
investing in companies with sound balance
sheets, professional management and
capital allocation policies that are aligned
with the interests of minority shareholders.
The use of derivatives to protect the
capital value of the portfolio or for efficient
portfolio management is fundamental to
the strategy of the Company’s Portfolio
Managers. Such derivatives may include
listed futures, call options, long puts, OTC
instruments and instruments to hedge
currency exposure with Board approval.
The Board will monitor the effectiveness
of the underlying process and the use of
derivatives.
In order to obtain further exposure
to equity indices or individual stocks,
the Company may enter into contracts
for difference where the underlying
investments are not delivered and
settlement is made in cash. In extreme
circumstances, and subject to Board
approval, the majority, or even all, of the
Company’s assets could be held in cash or
near cash instruments, with appropriate
diversification of cash held on deposit.
The Company may use gearing to enhance
performance but net gearing will not
exceed 30% of net asset value.
The Company does not tie its portfolio
construction to the constituents of any
benchmark; instead, the size of stock
positions is set on an absolute basis
reflecting where the best potential risk
adjusted returns are to be found.
Investment restrictions and spread of investment risk
The key restrictions imposed on the
Manager are that:
a) no more than 15% of the Company’s
total net assets, at the date of
acquisition, may be invested in any
one single company or group of
companies;
b) subject to the approval of the Board,
the Company may invest in collective
vehicles. If it was to do so, however, no
more than 10% of the Company’s total
net assets, at the date of acquisition,
may be invested in UK listed closed-
ended investment companies unless
such companies have a stated
investment policy not to invest more
than 15% of their gross assets in other
UK listed closed-ended investment
companies;
(c) the Company will not invest more than
15% of its gross assets in UK listed
closed-ended investment companies;
(d) no more than 50% of the Company’s
total net assets may be invested
in equities listed on a single stock
exchange; and
(e) the Manager will not invest in unlisted
equities other than with the approval
of the Board or when entitlements
are received or immediately prior to a
listing.
The investment portfolio on pages 34 to
36 demonstrates that, as at 31 December
2024, the Company held 59 investments
spread over multiple countries and in
a range of industry sectors. The two
largest investments, TSMC and Tencent
represented 11.7% and 5.0% respectively
of total investments.
The Board believes that the objective of
spreading risk has been achieved.
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Corporate and social responsibility
Diversity policy
The Board has adopted a diversity and
inclusion policy. Appointments and
succession plans will always be based on
merit and objective criteria and, within
this context, the Board seeks to promote
diversity, inclusion and equal opportunity.
The Board will encourage any recruitment
agencies it engages to find a range of
candidates that meet the objective criteria
agreed for each appointment. Candidates
for Board vacancies are selected based
on their skills and experience, which are
matched against the balance of skills and
experience of the overall Board taking
into account the criteria for the role being
offered.
The Board also considers the diversity
and inclusion policies of its key service
providers.
Statement on Board diversity –
gender and ethnic background
The Board has made a commitment to
consider diversity when reviewing the
composition of the Board and notes the
UK Listing Rule requirements on board
diversity:
• at least 40% of individuals on the board
are women;
• at least one senior board position is
held by a woman; and
• at least one individual on the board is
from a minority ethnic background.
The FCA defines senior board positions
as Chair, Chief Executive Officer (CEO),
Chief Financial Officer (CFO) or Senior
Independent Director (SID). As an
investment trust with no executive officers,
the Company has no CEO or CFO. The
Board has reflected the senior positions of
the Chair of the Board, SID and the Chair
of the Audit and Risk Committee in its
diversity tables.
The Board has chosen to align its
diversity reporting reference date with
the Company’s financial year end and
proposes to maintain this alignment for
future reporting periods. The following
information has been provided by each
Director through the completion of a
questionnaire.
As at 31 December 2024, the Company
met two of the three criteria, including
the target in relation to the number of
women on the Board and for at least
one senior board position to be held
by a woman. The target for at least one
individual on the Board to be from a
minority ethnic background was not
met. The Board is conscious that while
the Directors are all independent and
have a diverse range of views and
experience, its small composition will
make these targets challenging to fully
implement. Recognising the benefits
of a diverse Board, it is intended that
improving diversity will continue to be
a key factor when the Board makes its
next appointment. There have been no
changes since 31 December 2024 to the
date of publication of the Annual Report
and Financial Statements.
The tables below set out the gender and ethnic diversity composition of the Board as at 31 December 2024 and at the date of this
report.
Gender identity
Number of
Board members
%
of the Board
Number of
senior positions
1
on the Board
Men 2 50.0 1
Women 2 50.0 2
Not specified/prefer not to say – – –
Ethnic background
Number of
Board members
%
of the Board
Number of
senior positions
1
on the Board
White British or other White (including minority-white groups) 4 100.0 3
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/Black British – – –
Other ethnic group, including Arab – – –
Not specified/prefer not to say – – –
1
The Company considers the positions of Chair of the Board of Directors, SID and Chair of the Audit and Risk Committee to be senior positions of the Board.
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Financial crime policy
The Company continues to be committed
to carrying out its business fairly, honestly
and openly, and operates a financial crime
policy, covering bribery and corruption,
tax evasion, money laundering, terrorist
financing and sanctions. The Company
also seeks confirmation that its service
providers’ policies are operating soundly.
Greenhouse gas emissions and
energy usage
As the Company outsources its operations
to third parties, it consumed less than
40,000 kWh during the year and so has
no greenhouse gas emissions, energy
consumption or energy efficiency action
to report.
Modern Slavery Act 2015
As an investment trust, the Company
does not provide goods or services in the
normal course of business and does not
have customers. Accordingly, the Directors
consider that the Company is not required
to make any slavery or human trafficking
statement under the Modern Slavery Act
2015.
Climate related disclosures
On 30 June 2024, the Company’s Manager
produced a product level disclosure
consistent with the Task Force on Climate-
Related Financial Disclosures for the
period 1 January 2023 to 31 December
2023. This can be found here:
https://api.schroders.com/document-
store/TCFD-SG12092M-Schroder%20
Asian%20Total%20Return%20
Investment%20Company.pdf
Responsible investment
The Board delegates to the Manager the
responsibility to engage with investee
companies on social, environmental and
governance issues and to promote best
practice. The Board also expects the
Manager to exercise the Company’s voting
rights in consideration of these issues.
In addition to the description of the
Manager’s integration of ESG into the
investment process and the details in
this Strategic Report, a description of the
Manager’s policy on these matters can be
found on the Schroders website at
www.schroders.com. The Board notes that
the Manager believes that companies with
good ESG management often perform
better and deliver superior returns
over time. Engaging with companies
to understand how they approach ESG
management is an integral part of the
investment process.
Schroders has committed to the UN Global
Compact, amongst codes and standards,
and information about the application of
Schroders’ sustainability and responsible
investment policies can be found at:
https://www.schroders.com/en/sustainabili
ty/corporate-responsibility/.
The Board has received reporting from the
Manager on the application of its policy.
Promotion
The Company promotes its shares to
a broad range of investors including
discretionary wealth managers, private
investors, financial advisers and
institutions which have the potential to be
long-term supporters of the investment
strategy. The Company seeks to achieve
this through its Manager and corporate
broker, which promote the shares of the
Company through regular contact with
both current and potential shareholders
as well as their advisers.
These activities consist of investor lunches,
one-on-one meetings, regional road
shows and attendance at conferences for
professional investors. In addition, the
Company’s shares are supported by the
Manager’s wider marketing of investment
companies targeted at all types of
investors; this includes maintaining close
relationships with adviser and execution-
only platforms, advertising in the trade
press, maintaining relationships with
financial journalists and the provision of
digital information on Schroders’ website.
The Board also seeks active engagement
with investors, and meetings with the
Chair are offered to investors, when
appropriate.
Shareholders are encouraged to sign
up to the Manager’s Investment Trusts
update, http://www.schroders.com/trust-
updates/ to receive information on the
Company directly.
Section 3: Strategic Report
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Stakeholder Engagement – Section 172 Report
During the year, the Board discharged its duty under section 172 of the Companies Act 2006
to promote the success of the Company for the benefit of its members as a whole, having
regard to the interests of all stakeholders.
As an externally managed investment trust, the Company has
no employees, operations or premises and a number of the
Company’s functions are outsourced to third parties.
The Board identified its key stakeholders as the Company’s
shareholders, the Manager, Investment Manager, investee
companies, the Company’s lender and other service providers.
The table below explains how the Directors have engaged
with all stakeholders during the year, outlines the key activities
undertaken and the key decisions made by the Board.
Shareholders
Significance
Continued shareholder support
and engagement are critical
to the continuing existence of
the Company and the delivery
of the long-term strategy of its
business.
Engagement
AGM: The Company welcomes attendance and
participation from shareholders at the AGM.
Shareholders have the opportunity to meet
the Directors and at least one of the Portfolio
Managers and ask questions. The Board values
the feedback it receives from shareholders
which is incorporated into Board discussions.
Publications: The annual and half year
results presentations, as well as factsheets,
are available on the Company’s web pages
with their availability announced via the
London Stock Exchange. Feedback and/or
questions received from shareholders enable
the Company to evolve its reporting which,
in turn, helps to deliver transparent and
understandable updates.
Shareholder communication: The Manager
communicates with shareholders on a
regular basis. All investors are offered the
opportunity to meet the Chair, SID, or other
Board members, without using the Manager
or Company Secretary as a conduit, by writing
to the Company’s registered office. The
Board also corresponds with shareholders
by letter and email. The Board receives
regular feedback from its broker on investor
engagement and sentiment.
Investor Relations updates: At every Board
meeting, the Directors receive updates on
share trading activity, share price performance
and any shareholders’ feedback, as well as
any publications or comments in the press. To
gain a deeper understanding of the views of
its shareholders and potential investors, the
Manager also undertakes investor roadshows
throughout the year.
Continuation vote: The Company holds a
continuation vote every three years to allow
shareholders to decide on the long-term
future of the Company. The last continuation
vote took place at the AGM held in 2022
with 100% of votes cast in favour. The
next continuation vote will be proposed to
shareholders at the forthcoming AGM.
2024 application
At the AGM in 2024, questions and feedback from
shareholders were welcomed. The Board, along
with Robin Parbrook, look forward to meeting and
interacting with shareholders at the AGM in 2025.
The Company’s web pages host the annual and
half year reports. Via the Company’s web pages,
shareholders can subscribe to the Schroders
investment trusts newsletter to receive regular
updates on the Company.
The Chair of the Board met with a number of the
Company’s major shareholders during the year.
Their views were taken into consideration as part
of the Board’s duty to ensure their interests were
taken into account.
The Manager engaged with a number of the
Company’s shareholders and investors during the
year and regular feedback was provided to the
Board.
A number of promotional activities were
undertaken during the year including Portfolio
Manager interviews, webinars and coverage in
key publications.
The Board also continues to work with Kepler on
promoting the Company through its research
notes which are published following the release of
the Company’s annual results.
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Manager
Significance
The Company’s principal
relationship is with the
Manager, Schroder Unit Trusts
Limited.
The Manager sub-delegates
investment management
to Schroder Investment
Management Limited, the
‘Investment Manager’.
The Manager also promotes
the Company through its
investment trust sales,
marketing and PR teams.
Engagement
The Board maintains strong lines of
communication with the Manager via its
dedicated client director to ensure that the
Manager is fully aware of the Board’s views
and requirements.
Representatives of the investment trust sales,
marketing and PR teams regularly attend
Board meetings.
The Board, through the Management
Engagement Committee formally reviews the
performance of the Manager and contractual
terms of engagement at least annually.
2024 application
The Board received timely and accurate
information from the Manager and the dedicated
client director attended each Board meeting.
Between scheduled Board meetings the client
director ensured the Board was informed of
Manager and shareholder views, discount levels
and any other substantive matters.
The Manager has continued to manage the
Company’s assets in accordance with the
mandate provided by shareholders, with oversight
provided by the Board.
Investment Manager
Significance
The key outsourced function
is the provision of investment
management services,
delegated by the Manager to
the Investment Manager.
The Investment Manager’s
performance is critical for
the Company to deliver
its investment strategy
successfully and meet its
investment objective.
Holding the Company’s shares
offers investors a liquid
investment vehicle through
which they can obtain exposure
to the Company’s diversified
portfolio of investments.
Engagement
Maintaining a close and constructive working
relationship with the Investment Manager
is crucial as the Board and the Investment
Manager both aim to continue to achieve
a high rate of total return in line with the
investment objective. Representatives of
the Investment Manager attend all Board
and certain Committee meetings in order to
update the Directors on the performance of
the investments, the implementation of the
investment strategy and objective.
Important components in the Board’s
collaboration with the Investment Manager
are:
• encouraging open discussion with the
Investment Manager;
• recognising that the interests of
shareholders and the Investment Manager
are, for the most part, well aligned, adopting
a tone of constructive challenge, balanced
when those interests are not fully congruent
by robust negotiation of the Investment
Manager’s terms of engagement; and
• the Management Engagement Committee
reviews the performance of the Investment
Manager at least annually.
2024 application
Representatives of the Investment Manager,
including at least one of the Portfolio Managers,
attended each Board meeting to provide an
update on the investment portfolio along with
presenting on macroeconomic issues.
The portfolio activities undertaken by the
Investment Manager and the impact of decisions
affecting investment performance are set out in
the Investment Manager’s Review on pages 14
to 40.
The Board undertook its annual visit to the
region and visited Hong Kong, Macau and the
Philippines, as part of which, due diligence
meetings were undertaken with key personnel
from the Investment Manager.
Section 3: Strategic Report
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Investee Companies
Significance
The Board is committed to
responsible investing and
monitors the activities of
investee companies through its
delegation to the Investment
Manager.
Engagement
The Investment Manager conducts face-
to-face and/or virtual meetings with the
management teams of all investee companies
to understand current trading and prospects
for their businesses, and to ensure that their
ESG investment principles and approach are
understood.
The Investment Manager has discretionary
powers to exercise the Company’s voting
rights on resolutions proposed by the investee
companies within the Company’s portfolio.
The Investment Manager reports to the Board
on stewardship (including voting) issues and
the Board has the opportunity to question the
rationale for voting decisions made.
Through regular engagement and the exercise
of voting rights, the Investment Manager actively
works with companies to improve corporate
standards, transparency and accountability.
2024 application
The Board received regular updates on
engagement with investee companies from the
Investment Manager at its Board meetings.
In addition, the Board also visited Hong Kong,
Macau and the Philippines during the year
and met with investee companies and analysts
to understand better the challenges and
opportunities in the region.
During the year, the Investment Manager
engaged with many of its investee companies and
voted at shareholder meetings (further details
can be found on page 40).
Lender
Significance
Availability of funding and
liquidity are crucial to the
Company’s ability to take
advantage of investment
opportunities as they arise.
Engagement
Considering how important the availability of
funding is, the Company aims to demonstrate
to lenders that it is a well managed business
and, in particular, that the Board focuses
regularly and carefully on the management of
risk.
The Manager conducts the relationship with
the Company’s lender and reports to the
Board at each Board meeting, as and when
required, for renewals of terms or negotiation
of loan covenants. The Manager provides a
monthly statement of compliance with the
loan covenants to the lender.
2024 application
During the year, gearing was regularly
considered. The Board entered into an
amendment and restatement agreement in
July 2024 with The Bank of Nova Scotia, London
Branch in respect of the multicurrency revolving
credit facility, as previously amended and restated
in July 2023. The amendment and restatement
of the multicurrency revolving credit facility was
undertaken on a secured basis for a further year.
Other service providers
Significance
In order to operate as an
investment trust listed on the
London Stock Exchange, the
Company relies on a range of
advisers and service providers.
The Company ensures that
the third parties to which the
services have been outsourced
complete their roles in line with
contractual arrangements and
expectation thereby supporting
the Company.
Engagement
The Board maintains regular contact with
its key external providers, both through the
Board and Committee meetings, which service
providers are periodically invited to attend,
as well as outside of the regular meeting
cycle. Their advice, as well as their operating
requirements and views, are routinely taken
into account. The need to foster business
relationships with key service providers is
central to Directors’ decision-making as the
Board of an externally managed investment
trust.
2024 application
Under delegated authority from the Board, the
Management Engagement Committee reviewed
all material third party service providers. The
Board considered the ongoing appointments of
its service providers to be in the best interests of
the Company and its shareholders as a whole and
will continue to monitor their progress in the year
ahead.
During the year, members of the Board attended
an internal controls briefing session, hosted by
the Manager which assessed the internal controls
of certain key service providers including the
Manager, Investment Manager, the Company’s
depositary and custodian, HSBC and the
Company’s registrar, Equiniti.
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Examples of stakeholder consideration during the year
The Directors were particularly mindful of stakeholder considerations in reaching the following key decisions during the year ended
31 December 2024:
• the declaration of a final dividend of 11.50p per ordinary share (2023: 11.00p) which, following approval by shareholders at the AGM
on 24 April 2024 was paid on 10 May 2024;
• the consideration of Board succession planning and the appointment of Marion Sears as a non-executive Director on 24 April 2024,
to succeed Caroline Hitch who stepped down from the Board following the 2024 AGM, and in December 2024 as SID;
• the implementation of the Board’s discount control policy which aims to achieve a discount to NAV of no more than 5% in normal
market conditions;
• the Board entered into an amendment and restatement agreement in July 2024 in respect of its multicurrency revolving credit
facility. Given the specific requirements of the Company and various factors, including the interest rate environment, the Board, when
considering the amendment and restatement of the facility, concluded that the one year revolving credit facility remained the most
appropriate arrangement and The Bank of Nova Scotia, London Branch the most appropriate provider of the facility, on a secured
basis;
• maintaining the Company’s disciplined gearing framework, based on a number of valuation indicators to increase market exposure,
which should, over the longer term, enhance returns to shareholders. The Company used derivative hedging instruments, including
the introduction of CFDs as a cost effective means of borrowing, in addition to borrowing under the revolving credit facility;
• resolving that the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best
interests of shareholders as a whole; and
• together with the Portfolio Managers, the Board undertook its annual visit to the region and visited Hong Kong, Macau and the
Philippines to undertake due diligence meetings with key personnel from the Investment Manager, strategists and investee
companies.
Following the year end, the Board declared a final dividend of 11.50p per ordinary share which, if approved by shareholders at the AGM
on 24 April 2025 will be paid on 9 May 2025.
Section 3: Strategic Report
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Risk Report
This system assists the Board in
determining the nature and extent of the
risks it is willing to take in achieving the
Company’s strategic objectives.
Risk assessment and internal
controls review by the Board
Risk assessment includes consideration
of the scope and quality of the systems
of internal control operating within
key service providers, and ensures
regular communication of the results
of monitoring by such providers to the
Audit and Risk Committee, including the
incidence of significant control failings
or weaknesses that have been identified
at any time and the extent to which they
have resulted in unforeseen outcomes or
contingencies that may have a material
impact on the Company’s performance
or condition. The internal control
environment of the Manager, Investment
Manager, the depositary, custodian,
administrator and the registrar are tested
annually by independent external auditors.
The full reports are provided to the Audit
and Risk Committee alongside abridged
summaries.
Although the Board believes that it has a
robust framework of internal controls in
place, this can provide only reasonable,
and not absolute, assurance against
material financial misstatement or loss and
is designed to manage, not eliminate, risk.
Both the principal and emerging risks and
the monitoring system are also subject to
robust review at least annually. The last
assessment took place in March 2025.
During the year, the Board discussed
and monitored a number of risks which
could potentially impact the Company’s
ability to meet its strategic objectives. The
Board receives updates from the Manager,
Investment Manager, Company Secretary
and other service providers on emerging
risks that could affect the Company. The
Board was mindful during the year of
the global environment including the
results of several significant elections in
2024, notably in the US; the risks posed
by volatile markets; and geopolitical
uncertainty which could affect the asset
class. However, these were not considered
to be factors which explicitly impacted
the Company’s performance. These
risks are seen as exacerbating existing
risks and have been incorporated in the
macro factors, including the geopolitical/
economic environment and climate
change risk section in the table below.
The Board considered in detail whether
there were any material emerging
risks and has continued to include the
development of AI as an emerging risk in
the table below.
No significant control failings or
weaknesses were identified from the
Audit and Risk Committee’s ongoing risk
assessment which has been in place
throughout the financial year and up
to the date of this report. The Board is
satisfied that it has undertaken a detailed
review of the risks facing the Company.
A full analysis of the financial risks facing
the Company is set out in note 22 to the
financial statements on pages 97 to 102.
Actions taken by the Board and, where
appropriate, its Committees, to manage
and mitigate the Company’s principal
risks and uncertainties are set out in the
table below. The “Change” column on the
right highlights, at a glance, the Board’s
assessment of any increases or decreases
in risk during the year after mitigation and
management. The arrows show the risks
as increased, decreased or unchanged.
The Board, through its delegation to the Audit and Risk Committee, is responsible for the
Company’s system of risk management and internal control and for reviewing its effectiveness.
The Board has adopted a detailed matrix of principal, and, where applicable, emerging, risks
affecting the Company’s business as an investment trust and has established associated
policies and processes designed to manage and, where possible, mitigate those risks, which
are monitored by the Audit and Risk Committee on an ongoing basis.
Risk Mitigation and management Change
Macro factors, including the geopolitical/economic environment and climate change
Geopolitical instability, including:
• the Russian/Ukraine and Middle East conflicts and
China and Taiwan tensions;
• changes to the global economic environment; and
• rising tensions following the re-election of Trump
and the consequences of new policies
which might materially affect the ability of the
Company to achieve its investment objective.
The impact of climate change on investee companies
may also materially affect investment outcomes.
Geopolitical risks are an input into the investment
process and are monitored at each Board
meeting where there is also an opportunity to
discuss key market risk factors with the Portfolio
Managers. Further information on geopolitical
risk is included in the Outlook section of the
Chair’s Statement.
The Board visited Hong Kong, Macau and the
Philippines during the year and met with investee
companies and analysts to understand better the
challenges and opportunities in the region.
The Manager’s investment process includes
an assessment of climate related risks in the
evaluation of investee companies.
The
continued
increased
risk reflects
the changing
global
environment
and the
risks posed
by volatile
markets and
geopolitical
uncertainty.
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Section 3: Strategic Report
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Risk Mitigation and management Change
Investment objective and promotion
The Company’s investment objective may become out
of line with the requirements of investors and lead
to the Company becoming unattractive to investors,
decreasing demand for its shares and a widening
discount of the share price to the underlying NAV per
share.
The Company is not promoted in a way which
generates investor demand.
The appropriateness of the Company’s investment mandate
and the long-term investment strategy is regularly reviewed
by the Board and the success of the Company in meeting its
stated objectives is monitored. The Board holds a strategy
meeting each year to consider the investment objective and
policy and the Company’s longer term investment strategy.
The share price relative to the NAV per share is kept under
review as a key performance indicator and is considered
against the Company’s peers on a regular basis. The use
of the buyback authority is also reviewed regularly. The
Investment Manager and corporate broker monitor market
feedback and the Board consider this at each quarterly
Board meeting.
Proactive engagement with shareholders takes place via
the AGM, feedback from shareholder presentations, and
a formal programme of individual meetings are offered to
major shareholders on an annual basis.
The Manager provides a dedicated, experienced
investment trust sales, marketing and PR team. The
marketing programme continued to provide promotional
opportunities for the Company throughout the year and
included advertising, video and podcast content, sponsored
research provided by Kepler, and ‘roadshow’ events,
visiting investors across the UK. The performance of the
Manager is evaluated, at least annually by the Management
Engagement Committee.
Financial
The Company is exposed to a range of financial risks
including market, liquidity, interest rate, credit and fair
values of financial assets and financial liabilities.
The financial risks associated with the economic
environment that might impact the Company are mitigated,
to some extent, by the Investment Manager. Note 22 to the
financial statements provides further details of the steps
taken to mitigate those risks associated with the portfolio.
Investment strategy and performance
Poor stock selection or investing outside of the
investment restrictions and guidelines set by the
Board could result in poor performance.
The Investment Manager is experienced and has a long
track record in successfully investing in Asian equity
holdings.
The Board oversees the implementation of the investment
strategy, compliance with investment restrictions and
guidelines and keeps investment performance under close
review. One, or more, of the Portfolio Managers attend all
Board meetings and review the portfolio with the Board
using performance data and KPIs.
A detailed formal appraisal of the performance of the
Manager and Investment Manager is carried out annually
by the Management Engagement Committee.
Gearing/liquidity
The Company adopts an inappropriate gearing or
derivative strategy.
The Company’s investments are insufficiently liquid
resulting in breach of loan covenants in the event of a
severe fall in valuations.
The Board sets gearing limits of 30% of NAV and the
Investment Manager reports to the Board on gearing levels
and derivative activity at every Board meeting.
Liquidity stress testing is carried out on a regular basis.
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Risk Mitigation and management Change
ESG considerations
Failure by the Company to disclose in an appropriate
manner how the investment process integrates
consideration of ESG factors could lead to the
Company’s shares being less attractive to investors
as well as potential valuation issues in the underlying
investee companies.
The consideration of material climate change risks, ESG
factors and the Sustainability Disclosure Requirements is
integrated into the investment process and reported at
Board meetings.
The Investment Manager considers and evaluates the
approach investee companies take to recognise and
mitigate material climate change risks and also considers
the portfolio’s investee companies carbon footprint versus
the Reference Index.
The Manager has implemented a comprehensive ESG policy
outlined in detail on pages 39 and 40.
Key person
The retirement or departure of one or more of the
Investment Manager’s key investment professionals
could impact the Company’s performance.
The Portfolio Managers have a contractual notice period
and the Investment Manager has a compensation and
incentive scheme to recruit and retain key staff including
the Portfolio Managers, and has developed a suitable
succession planning programme, which seeks to ease the
impact that the loss of a key investment professional may
have on the Company’s performance. The Investment
Manager would notify any change in its key professionals
to the Board at the earliest possible opportunity and the
Board would be made aware of all efforts made to fill a
vacancy.
The Portfolio Managers are supported by a wider team of
experienced portfolio managers and research analysts,
mitigating the impact of the loss of any key professionals by
the Investment Manager on the Company’s performance.
Compliance with regulations
Failure to comply with relevant laws and regulations
could result in fines, loss of reputation and potentially
loss of investment trust status.
The Board and Manager monitor changes in government
policy and legislation which may have an impact on the
Company, and the Audit and Risk Committee monitors
compliance with regulations by reviewing internal control
reports from the Manager.
From time to time the Board employs external advisers to
advise on specific matters.
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Risk Mitigation and management Change
Oversight of service providers and control environment
The Company has no employees and has delegated
certain functions to a number of service providers.
Failure of controls, including as a result of fraud, and
poor performance of any service provider, could lead
to disruption, reputational damage or loss.
The Board receives reports from the Manager on its
internal controls and risk management throughout the
year, including those relating to cybersecurity, and receives
assurances from all its other significant service providers on
at least an annual basis.
The Management Engagement Committee reviews the
performance of key service providers at least annually. The
Manager also monitors closely the control environments and
quality of services provided by third parties, including those
of the depositary, through service level agreements and
regular meetings.
Directors attend an annual internal controls briefing session,
hosted by the Manager in respect of the internal controls
of the Company’s key service providers including the
Company’s depositary and custodian, HSBC, the Company’s
registrar, Equiniti, and Schroders Group Internal Audit team.
Experienced service providers are appointed by the
Company subject to due diligence processes and clearly
documented contractual arrangements which include
agreed service level specifications and notice periods for
terminations.
Further details of the internal controls which are in place
are set out in the Audit and Risk Committee’s Report on
pages 66 to 68.
Information technology resilience and security
Cyber risk such as fraud, sabotage or crime
perpetrated against the Company or any of its third
party service providers could result in data theft,
service disruption and reputational damage.
Cybersecurity is closely monitored by the Audit and Risk
Committee as part of the review of the internal controls of
its service providers.
The Manager’s IT security team present to the Directors
on cybersecurity controls as part of the annual internal
controls briefing session hosted by Schroders.
Emerging risk
AI
The development of AI presents both potential risks and opportunities to businesses in almost every sector. The extent of the risk
presented by AI is hard to assess at this point but the Board considers that it is an emerging risk and together with the Manager
and Investment Manager will monitor developments in this area.
Section 3: Strategic Report
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Conclusion
Viability statement
The Directors have assessed the viability
of the Company over a five year period,
ending 31 December 2029 taking into
account the Company’s position at
31 December 2024 and the potential
impact of the principal and emerging
risks it faces for the review period. This is
further detailed in the Chair’s Statement,
Investment Manager’s Review and the
Risk Report sections of this report. The
Directors have assessed the Company’s
operational resilience and they are
satisfied that the Company’s outsourced
service providers will continue to operate
effectively.
The Board believes that a period of five
years reflects a suitable time horizon for
strategic planning, taking into account the
investment policy, liquidity of investments,
potential impact of economic cycles,
nature of operating costs, dividends and
availability of funding.
In preparing these financial statements,
the Directors have considered the impact
of the Company’s emerging risks as set out
on page 55, and have concluded that there
was no further impact to be taken into
account as investments are valued based
on market pricing.
The Directors considered the beneficial tax
treatment the Company is eligible for as
an investment trust. If changes to these
taxation arrangements were to be made,
it would affect the viability of the Company
to act as an effective investment vehicle.
The Directors reviewed a stress test in
which the Company’s NAV dropped by 50%
and noted that, based on the assumptions
in the test, the Company would continue
to be viable over a five year period.
Whilst the Company’s Articles of
Association require that a proposal for
the continuation of the Company be put
forward at the Company’s AGM in 2025,
the Directors have no reason to believe
that such a resolution will not be passed
by shareholders.
The Directors have also considered the
Company’s income and expenditure
projections and the fact that the
Company’s investments comprise readily
realisable securities which can be sold to
meet funding requirements if necessary.
Based on the Company’s processes for
monitoring operating costs, the Board’s
view that the Manager has the appropriate
depth and quality of resource to achieve
superior returns in the longer term, the
portfolio risk profile, limits imposed on
gearing, counterparty exposure, liquidity
risk and financial controls, the Directors
have concluded that there is a reasonable
expectation that the Company will be able
to continue in operation and meet its
liabilities as they fall due over the five year
period of their assessment.
Going concern
The Directors have assessed the principal
and emerging risks and the matters
referred to in the viability statement,
including the continuation vote at the
AGM in April 2025. The Directors noted
the Company’s portfolio is comprised of
liquid stocks, and the Company’s operating
expenses are predominantly variable costs,
which would fall pro-rata in the event of a
severe market downturn.
Based on the work the Directors have
performed, they have not identified
any material events or conditions that,
individually or collectively, may cast
significant doubt on the Company’s ability
to continue as a going concern for the
period assessed by the Directors, being
the period to 31 March 2026 which is
at least 12 months from the date the
financial statements were authorised for
issue.
By order of the Board
Schroder Investment Management
Limited
Company Secretary
18 March 2025
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Imperial Palace Watch Tower, Beijing, China
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Section 4: Governance
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Section 4: Governance
Board of Directors 60
Directors’ Report 62
Audit and Risk Committee Report 66
Management Engagement Committee Report 69
Nomination Committee Report 70
Directors’ Remuneration Report 72
Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements 75
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Independent non-executive DirectorIndependent non-executive Chair
Andrew CaineySarah MacAulay
Board of Directors
Length of service: six years – appointed a
Director in March 2019.
Experience: Andrew is an experienced
business consultant, policy adviser,
speaker and writer. He is a Senior
Associate Fellow of the Royal United
Services Institute, a Director of the UK
National Committee on China, a Senior
Advisor to Boston Consulting Group, and a
Senior Advisor of Lumen Capital Investors.
He previously held roles with the Boston
Consulting Group, Booz & Company and
Tony Blair Associates. During the course
of his career, Andrew spent over 15
years in Asia, including China, Korea and
Singapore.
Contribution to the Board and its
Committees: Andrew is an experienced
business consultant. His knowledge of Asia
and close interest in the area contributes
to the Company’s long-term sustainable
success.
Committee membership: Audit and
Risk, Management Engagement and
Nomination Committees.
Remuneration for the year ended
31 December 2024: £37,000 per annum.
Number of shares held: 26,753*
Length of service: seven years –
appointed a Director in March 2018 and as
Chair in May 2020.
Experience: Sarah has over 20 years of
Asian fund management experience based
in both London and Hong Kong, managing
unit trusts and institutional assets. She
was formerly a Director of Baring Asset
Management (Asia) Ltd in Hong Kong,
Asian Investment Manager at Kleinwort
Benson Investment Management and
Eagle Star in London. She is currently
Senior Independent Director on the Board
of Fidelity Japan Trust PLC, a non-executive
Director of Baillie Gifford China Growth
Trust plc and a non-executive Director of
Bellevue Healthcare Trust plc. Until March
2024, Sarah was Chair of JPMorgan Multi-
Asset Growth & Income plc and Senior
Independent Director of abrdn China
Investment Company Limited.
Contribution to the Board and its
Committees: Sarah’s extensive experience
in Asian fund management and as a non-
executive Director on other investment
trust boards enables her to bring valuable
insight to the Board’s deliberations,
facilitate successfully Board discussions
and prioritise strategic decisions.
Committee membership: Audit and Risk,
Management Engagement (Chair) and
Nomination (Chair) Committees.
Remuneration for the year ended
31 December 2024: £49,000 per annum.
Number of shares held: 72,475*
All Directors are
non-executive and
independent of the
Manager. All Directors
are members of the Audit
and Risk Committee, the
Management Engagement
Committee and the
Nomination Committee.
*Shareholdings are as at 18 March 2025, full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on page 74.
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Senior Independent non-executive
Director
Independent non-executive Director
and Chair of the Audit and Risk
Committee
Marion Sears Jasper Judd
Length of service: 11 months –
appointed a Director in April 2024 and
Senior Independent Director in December
2024.
Experience: Marion had a career in the
City as an analyst and subsequently in
international M&A. Since then, she has
served on a number of boards as a non-
executive Director, including corporates
and investment trusts. She has acted
as a SID and chaired Remuneration,
Nomination and Sustainability committees
across many sectors, giving her long-
standing PLC experience and stakeholder
understanding. Marion is currently a
non-executive Director at Dunelm Group
plc and, with effect from 1 April 2025, SID
and Chair of the Remuneration Committee
of Shepherd Neame Limited. She was
previously a non-executive Director of
Keywords Studios plc and WH Smith PLC.
Contribution to the Board and its
Committees: Marion’s long standing
experience in the City is valuable to the
Board. Her experience as a non-executive
director on corporate boards means she is
well placed to help bring strong business
insight and market experience to the
Board, contributing to driving the business
forward.
Committee membership: Audit and
Risk, Management Engagement and
Nomination Committees.
Remuneration for the year ended
31 December 2024: £37,000 per annum.
Number of shares held: 10,000*
Length of service: two years – appointed
a Director in February 2023 and Chair
of the Audit and Risk Committee in April
2023.
Experience: Jasper held a number
of senior finance and strategy roles,
including Global Head of Strategy, at
Brambles Limited, a listed Australian multi-
national. He is an Associate of the Institute
of Chartered Accountants in England &
Wales. Jasper is also the Audit and Risk
Committee Chairman of Brown Advisory
US Smaller Companies PLC and Audit
Committee Chairman of Dunedin Income
Growth Investment Trust PLC. He has
previously been a non-executive Director
of JPMorgan Indian Investment Trust plc.
Contribution to the Board and
its Committees: Jasper’s extensive
financial and strategic experience and
experience as a non-executive Director on
other boards means he is able to bring
significant insight to the Board’s decision
making.
Committee membership: Audit and Risk
(Chair), Management Engagement and
Nomination Committees.
Remuneration for the year ended
31 December 2024: £43,000 per annum.
Number of shares held: 9,280*
*Shareholdings are as at 18 March 2025, full details of Directors’ shareholdings are set out in the Directors’ Remuneration Report on page 74.
Section 4: Governance
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Directors’ Report
The Directors submit their report and the audited financial statements of the Company for the
year ended 31 December 2024.
Directors and officers
Chair
The Chair is an independent non-executive Director who
is responsible for leadership of the Board and ensuring its
effectiveness in all aspects of its role. The Chair’s biography is
detailed on page 60. She has no conflicting relationships.
Senior Independent Director (SID)
The SID is responsible for the evaluation of the Chair, and also
serves as a secondary point of contact for shareholders.
Company Secretary
Schroder Investment Management Limited (“SIM”) provides
company secretarial support to the Board and is responsible
for assisting the Chair with Board meetings and advising the
Board with respect to governance. The Company Secretary also
manages the relationship with the Company’s service providers,
except for the Manager. Shareholders wishing to lodge questions
in advance of the AGM are invited to do so by writing to the
Company Secretary at the address given on the outside back
cover or by email to: amcompanysecretary@schroders.com.
Role and operation of the Board
The Board (of four Directors, listed on pages 60 and 61) is the
Company’s governing body; it sets the Company’s strategy and is
collectively responsible to shareholders for its long-term success.
The Board is responsible for appointing and subsequently
monitoring the activities of the Manager and other service
providers to ensure that the investment objective of the Company
continues to be met. The Board also ensures that the Manager
adheres to the investment restrictions set by the Board and acts
within the parameters set by it in respect of any gearing. The
Strategic Report on pages 44 to 56 sets out further detail of how
the Board reviews the Company’s strategy, risk management
and internal controls. These sections form part of this Directors’
Report.
A formal schedule of matters specifically reserved for decision
by the Board has been defined and a procedure adopted for
Directors, in the furtherance of their duties, to take independent
professional advice at the expense of the Company.
The Chair ensures that all Directors receive relevant management,
regulatory and financial information in a timely manner and that
they are provided, on a regular basis, with key information on the
Company’s policies, regulatory requirements and internal controls.
Four Board meetings are usually scheduled each year to deal
with matters including: the setting and monitoring of investment
strategy; approval of borrowings and/or cash positions; review of
investment performance, the level of discount of the Company’s
shares to NAV per share, promotion of the Company and services
provided by third parties. Additional meetings of the Board are
arranged as required. At each scheduled Board meeting, the
Directors receive reports from the Manager, Investment Manager,
other key service providers and the Company’s advisers. Ad hoc
reports and information are supplied to the Board as required.
The Board has approved a policy on Directors’ conflicts of interest.
Under this policy, Directors are required to disclose all actual
and potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions
or refuse to authorise such conflicts if deemed appropriate.
No Director has any connections with the Manager, shared
directorships with other Directors or material interests in any
contract which is significant to the Company’s business.
Board of Directors (left to right): Marion Sears, Andrew Cainey, Sarah MacAulay and Jasper Judd.
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Key service providers
The Board has adopted an outsourced business model and has
appointed the following key service providers:
Manager
The Company is an Alternative Investment Fund as defined by
the Alternative Investment Fund Managers Directive and has
appointed Schroder Unit Trusts Limited (“SUTL”) as the Manager
in accordance with the terms of an Alternative Investment Fund
Manager (AIFM) agreement. The AIFM agreement, which is
governed by the laws of England and Wales, can be terminated by
either party on six months’ notice or on immediate notice in the
event of certain breaches or the insolvency of either party. As at
the date of this report, no such notice had been given by either
party.
SUTL is authorised and regulated by the FCA and provides
portfolio management, risk management, accounting and
company secretarial services to the Company under the AIFM
agreement. The Manager also provides general marketing
support for the Company and manages relationships with key
investors, in conjunction with the Chair, other Board members or
the corporate broker as appropriate. The Manager has delegated
investment management, administration, accounting and
company secretarial services to another wholly owned subsidiary
of Schroders plc, (“SIM”), which delegates certain accounting and
administration services to HSBC Securities Services (UK) Limited,
as administrator.
The Manager has in place appropriate professional indemnity
cover.
The Schroders Group manages £778.7 billion (as at 31 December
2024) on behalf of institutional and retail investors, financial
institutions and high net worth clients from around the world,
invested in a broad range of asset classes across equities, fixed
income, multi-asset and alternatives.
Fees payable to the Manager
Under the terms of the AIFM agreement, the Manager is entitled
to a fee at a rate of 0.65% of gross assets less cash and cash
equivalents.
A performance fee is payable amounting to 10% of any
outperformance of the NAV over an annual hurdle of 7%, provided
that the closing NAV per share exceeds the “high water mark” NAV
at the date the last performance fee was paid. The sum of the
base fee and any performance fee payable is capped at 1.25% of
the closing net assets.
In addition, the Manager may only be paid a performance fee
when the Company’s NAV total return is equal or greater to the
total return of the Reference Index.
If the Company invests in funds managed or advised by
the Manager, any fees earned by the Manager from those
investments are rebated to the Company.
The management fee payable in respect of the year ended
31 December 2024 amounted to £3,176,000 (2023: £3,051,000).
A performance fee of £2,767,000 is payable for the year
(2023: £nil). The Manager is also entitled to a fee for providing
administrative, accounting and company secretarial services to
the Company. For these services in the year ended 31 December
2024, the Manager received a fee of £75,000 (2023: £75,000).
Details of all amounts payable to the Manager are set out in notes
4 and 19 of the financial statements.
The Board has reviewed the performance of the Manager during
the year under review and continues to consider that it has the
appropriate depth and quality of resource to deliver superior
returns over the longer term. The Manager is supported by
significant depth of knowledge and experience in Asia, with
regional resources and local analysts. Thus, the Board considers
that the Manager’s appointment under the terms of the AIFM
agreement is in the best interests of shareholders as a whole.
Depositary
HSBC Bank plc, which is authorised by the Prudential Regulation
Authority (PRA) and regulated by the FCA and the PRA, carries
out certain duties of a depositary specified in the AIFM Directive
including, in relation to the Company, as follows:
• safekeeping of the assets of the Company which are entrusted
to it;
• cash monitoring and verifying the Company’s cash flows; and
• oversight of the Company and the Manager.
The Company, the Manager and the depositary may terminate
the depositary agreement at any time by giving 90 days’ notice in
writing. The depositary may only be removed from office when a
new depositary is appointed by the Company.
Registrar
Equiniti Limited has been appointed as the Company’s registrar.
Equiniti’s services to the Company include share register
maintenance (including the issuance, transfer and cancellation
of shares as necessary), acting as agent for the payment of any
dividends, management of company meetings (including the
registering of proxy votes and scrutineer services as necessary),
handling shareholder queries and correspondence and
processing corporate actions.
Compliance with the AIC Code of Corporate
Governance
The Board of the Company has considered the principles and
provisions of the AIC Code of Corporate Governance (the “AIC
Code”). The AIC Code addresses the Principles and Provisions set
out in the UK Corporate Governance Code (the “UK Code”), as well
as setting out additional Provisions on issues that are of specific
relevance to the Company. The Board considers that reporting
against the Principles and Provisions of the AIC Code, provides
more relevant information to shareholders.
The AIC Code is available on the AIC website at www.theaic.co.uk. It
includes an explanation of how the AIC Code adopts the Principles
and Provisions set out in the UK Code to make them relevant
for investment companies. The UK Code is available from the
Financial Reporting Council’s website at www.frc.org.uk.
The FCA requires all UK listed companies to disclose how they
have complied with the provisions of the UK Code. This statement,
together with the Statement of Directors’ Responsibilities, viability
statement and going concern statement set out on pages 75
and 56 respectively, indicates how the Company has complied
with the principles of good governance of the AIC Code and
its requirements on internal control. The Strategic Report,
Directors’ Report and Audit and Risk Committee Report provide
further details on the Company’s internal controls (including risk
management), governance and diversity policy.
The Board is satisfied that the Company’s current governance
framework is compliant with the AIC Code. The Nomination
Committee reviews Directors’ remuneration and as such there is
no separate remuneration committee.
Section 4: Governance
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Revenue, final dividend and dividend policy
The net revenue return for the year, after finance costs and taxation, was £9,164,000 (2023: £10,497,000), equivalent to a revenue
return per ordinary share of 9.61 pence (2023: 10.26 pence).
The Board has recommended the payment of a final dividend for the year ended 31 December 2024 of 11.50 pence per share (2023:
11.50 pence) payable on 9 May 2025 to shareholders on the register on 11 April 2025, subject to approval by shareholders at the AGM
on 24 April 2025.
The Board’s policy is to pay out substantially all the Company’s revenue.
Committees
In order to assist the Board in fulfilling its governance responsibilities, it has delegated certain functions to Committees. The roles and
responsibilities of these Committees, together with details of work undertaken during the year under review, is outlined over the next
few pages.
The reports of the Audit and Risk Committee, Management Engagement Committee and Nomination Committee are incorporated
into and form part of the Directors’ Report. Each committee’s effectiveness was assessed, and judged to be satisfactory, as part of the
Board’s annual review of the Board and its Committees.
Other required Directors’ Report disclosures under laws, regulations, and the AIC Code
Status
The Company carries on business as an investment trust. Its shares are listed and admitted to trading on the London Stock Exchange.
It has been approved by HM Revenue & Customs as an investment trust in accordance with Section 1158 of the Corporation Tax Act
2010, by way of a one-off application and it is intended that the Company will continue to conduct its affairs in a manner which will
enable it to retain this status.
The Company is domiciled in the UK and is an investment company within the meaning of Section 833 of the Companies Act 2006. The
Company is not a “close” company for taxation purposes.
The Articles of Association contain provisions requiring the Directors to put a proposal for the continuation of the Company to
shareholders at the AGM in 2025 and thereafter at three yearly intervals.
Share capital and substantial share interests
As at the date of this report, the Company had 109,114,651 ordinary shares of 5 pence in issue, of which 15,590,197 ordinary shares
were held in treasury.
During the year under review 3,709,666 ordinary shares with a nominal value of 5 pence per share, which represented 3.8% of the
Company’s ordinary shares in issue at the start of the year, were bought back. All ordinary shares bought back were placed in treasury.
All shares in issue rank equally with respect to voting, dividends and any distribution on winding up. The Company has received details
of changes to the Company’s share capital during the year under review which are given in note 14 to the financial statements on
page 94. As at 31 December 2024, the Company has received notifications in accordance with the FCA’s Disclosure Guidance and
Transparency Rule 5.1.2R of the below interests in 3% or more of the voting rights attaching to the Company’s issued share capital.
As at 31 December 2024
Number
of shares
% of
total voting rights
Rathbones Investment Management Limited 11,269,824 12.00
Evelyn Partners
1
10,264,905 10.06
Quilter PLC 9,994,906 9.99
Charles Stanley Group plc 5,857,502 5.85
F&C Asset Management plc 3,547,705 4.28
1
Notification made in the previous name of Tilney Smith & Williamson.
Following the year end, Rathbones Investment Management Limited notified the Company that the number of shares held was
12,190,504 equating to 13.03% of total voting rights. No further changes had been advised as at the date of this report.
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Directors’ attendance at meetings
The number of scheduled meetings of the Board and its Committees held during the financial year and the attendance of individual
Directors is shown below. Whenever possible all Directors attend the AGM. The Board also met for a small number of additional, ad hoc,
meetings during the year to address time sensitive matters that arose between scheduled quarterly meetings. These meetings were
generally held at short notice and attended by those Directors available at the time.
Director Board
Audit and Risk
Committee
Management
Engagement Committee
Nomination
Committee
Sarah MacAulay 4/4 3/3 1/1 1/1
Andrew Cainey 4/4 3/3 1/1 1/1
Jasper Judd 4/4 3/3 1/1 1/1
Marion Sears
1
3/3 2/2 1/1 1/1
1
Marion Sears was appointed as a Director on 24 April 2024.
Provision of information to the auditor
The Directors at the date of approval of this report confirm that, so far as each of them is aware, there is no relevant audit information
of which the Company’s auditor is unaware; and each Director has taken all the steps that he or she ought to have taken as a Director
in order to make himself or herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
Directors’ and officers’ liability insurance and indemnities
Directors’ and officers’ liability insurance cover was in place for the Directors throughout the year. The Company’s Articles of Association
provide, subject to the provisions of UK legislation, an indemnity for Directors in respect of costs which they may incur relating to the
defence of any proceedings brought against them arising out of their positions as Directors, in which they are acquitted or judgement
is given in their favour by the Court.
This is a qualifying third party indemnity policy and was in place throughout the year under review for each Director and to the date of
this report.
By order of the Board
Schroder Investment Management Limited
Company Secretary
18 March 2025
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All Directors are members of the Committee. Jasper Judd is the Chair of the Committee. The Board has satisfied itself that at least one
of the Committee’s members has recent and relevant financial experience and that the Committee as a whole has competence relevant
to the sector in which the Company operates. The AIC Code permits the Chair to be a member of the Audit Committee of an investment
trust. Recognising Sarah MacAulay’s significant experience, it is considered appropriate for the Chair of the Board to be a member of the
Audit and Risk Committee. The Committee’s terms of reference are available on the Company’s web pages: www.schroders.co.uk/satric.
Ongoing risk review
Review of external
auditors
Half year
report
Audit
planning
Audit Annual
report
Audit and Risk Committee Report
Risks and internal controls
Principal and emerging risks and
uncertainties
To establish a process for identifying,
assessing, managing and monitoring
the principal and emerging risks of the
Company and to explain how these are
managed or mitigated.
Internal controls
To monitor the adequacy and effectiveness
of the risk management and internal
control systems of the Company’s third
party services providers, including the
Manager, as illustrated in the diagram
below.
Financial reports and valuation
Financial statements
To monitor the integrity of the financial
statements of the Company and any
formal announcements relating to the
Company’s financial performance and
valuation. To review the annual and half
year reports and to advise the Board on
whether the Annual Report is fair, balanced
and understandable.
Going concern and viability
To review the position and make
recommendations to the Board in relation
to whether it considers it appropriate
to adopt the going concern basis of
accounting in preparing its annual and half
year financial statements. To review the
disclosures made by the Company in the
viability statement.
Audit
Audit results
To discuss any matters arising from the
audit and recommendations made by the
auditor.
Auditor appointment, independence
and performance
To make recommendations to the
Board, in relation to the appointment,
re-appointment, effectiveness, non-audit
services and removal of the auditor.
To review their independence and to
approve their remuneration and terms of
engagement. To review the audit plan and
engagement letter.
The duties, responsibilities and work carried out by the Audit and Risk Committee during the
year which included monitoring the integrity of the Company’s financial reporting and internal
controls, are set out in further detail below:
Approach
The Committee’s key roles and responsibilities are set out in the table below.
• Review of
control
processes
• Periodic testing of
control processes
Manager’s Internal audit
Audit and Risk Committee
HSBC Bank plc
Depositary
HSBC Bank plc
Custodian
Schroder Unit Trusts Limited
AIFM
Schroder Investment
Management Limited
Investment manager
HSBC Securities Services (UK) Limited
Accounting and Administration services
Periodic
Independently audited
assurance reports on controls
Ad hoc escalations and
regular issues reporting
Periodically reports
the results of its
testing activities
Periodically reports its
supervisory activities
and provides ad hoc
escalations
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Risk management and internal
controls
Risk management and internal
controls
Reviewed the internal controls operating
within the Manager, depositary, custodian,
administrator and registrar, including
independently audited internal controls
reports. In July 2024, members of the
Committee met with the key service
providers at an annual review meeting in
addition to reviewing the quarterly reports
covering the operations of the service
providers.
These reports and reviews collectively
covered the effectiveness of the
Company’s material controls, including
financial, operational, reporting and
compliance controls. Following these
reviews, the Committee considered that
a sufficient level of internal assurance
was in place and the work of the external
audit was not adversely impacted by the
absence of an internal audit function.
It was therefore recommended that an
internal audit function was not required at
present.
Following a review of the Company’s
risk management and internal controls
framework, the Committee noted that
these remained effective as at the end
of the financial year ended 31 December
2024.
Compliance with the investment
trust qualifying rules in S1158 of the
Corporation Tax Act 2010
Consideration of the Manager’s report
confirming compliance.
Principal risks
Reviewing the principal and emerging risks
faced by the Company and the systems,
processes and oversight in place to
identify, manage and mitigate the risks.
Financial reports and valuation
Recognition of investment income
Considered dividends received against
forecast and the allocation of special
dividends to income or capital.
Calculation of the investment
management and performance fees
Consideration of methodology used to
calculate the fees, matched against the
criteria set out in the AIFM agreement.
Financial reporting
Considered the accounting policies and
judgements used in preparing the half
year and annual financial statements.
Overall accuracy of the Annual Report
and Financial Statements
Consideration of the draft Annual Report
and Financial Statements and the letter
of representation from the Manager in
support of the letter of representation to
the auditor.
Valuation and existence of holdings
Quarterly review of portfolio holdings,
including the portfolio valuation, to
ensure that assets are correctly valued, in
accordance with the accounting policies
set out in note 1(b) to the financial
statements and ownership of assets is
secured. Periodic review of assurance
reports relating to the existence of
controls to ensure valuations are
appropriate and ownership of assets is
appropriately verified through custodian
reconciliations.
Fair, balanced and understandable
Reviewed the Annual Report and Financial
Statements to ensure that it was fair,
balanced and understandable.
Going concern and viability
Reviewing the impact of risks on going
concern and longer-term viability.
Audit
Effectiveness of the independent audit
process and auditor performance
Evaluated the effectiveness of the
independent audit firm and process
prior to making a recommendation that
the auditor should be re-appointed at
the forthcoming AGM. Evaluated the
auditor’s performance against agreed
criteria including: qualification; knowledge,
expertise and resources; independence
policies; effectiveness of audit planning;
adherence to auditing standards; and
overall competence, alongside feedback
from the Manager on the audit process.
The Committee noted the auditor had
demonstrated its professional scepticism
during the audit.
Auditor independence
Ernst & Young LLP has provided audit
services to the Company for six years,
since appointment by the Company
on 6 September 2019 to audit the
financial statements for the year ended
31 December 2019 and subsequent
financial periods. The auditor is required
to rotate the senior statutory auditor
every five years. There are no contractual
obligations restricting the choice of
external auditor.
Having completed five years acting as
the Company’s senior statutory auditor,
following the completion of the audit in
respect of the year ended 31 December
2023, Caroline Mercer was succeeded
by James Beszant as the senior statutory
auditor. This is therefore the first year that
the senior statutory auditor, James Beszant
has conducted the audit of the Company’s
financial statements. The Company is
compliant with the provisions of the
September 2014 Competition and Markets
Authority Order, which requires that FTSE
350 companies put their audit out to
tender at least every ten years.
Meetings with the auditor
Met the auditor without representatives
of the Manager present. Representatives
of the auditor attended the Committee
meeting at which the draft Annual Report
and Financial Statements were considered.
Application during the year
The table below sets out how the Committee discharged its duties during the year under review and up until the approval of this
report. The Committee met three times during the year. Further details on attendance can be found on page 65. An evaluation of the
Committee’s effectiveness and review of its terms of reference was completed during the year.
Significant issues identified during the Committee’s review of the Company’s principal and emerging risks, and key matters
communicated by the auditor during reporting are included below.
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Risk management and internal
controls
Financial reports and valuation
Audit
Provision of non-audit services by the
auditor
Reviewed the Financial Reporting Council’s
Guidance on Audit Committees and
formulated a policy on the provision of
non-audit services by the Company’s
auditor. The Committee determined that
the Company’s appointed auditor will not
be considered for the provision of certain
non-audit services, such as accounting and
preparation of the financial statements,
internal audit and custody. The auditor
may, if required, provide other non-audit
services which will be judged on a
case-by-case basis. The auditor did not
provide any non-audit services to the
Company during the year.
Consent to continue as auditor
Ernst & Young LLP indicated to the
committee their willingness to continue to
act as auditor.
Recommendations made to, and approved by, the Board:
As a result of the work performed, the Committee has concluded that the Annual Report for the year ended 31 December 2024, taken
as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s
position, performance, business model and strategy, and has reported on these findings to the Board. The Board’s conclusions in this
respect are set out in the Statement of Directors’ Responsibilities on page 75.
Having reviewed the performance of the auditor as described above, the Committee considered it appropriate to recommend the re-
appointment of Ernst & Young LLP as auditor. Resolutions to re-appoint Ernst & Young LLP as auditor to the Company, and to authorise
the Directors to determine the auditor’s remuneration will be proposed at the AGM.
By order of the Board
Jasper Judd
Chair of the Audit and Risk Committee
18 March 2025
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Management Engagement Committee Report
The Management Engagement Committee is responsible for (1) the monitoring and oversight
ofthe Manager’s performance and fees, and confirming the Manager’s ongoing suitability, and
(2) reviewing and assessing the Company’s other service providers, and reviewing their fees.
All Directors are members of the Committee. Sarah MacAulay is the Chair of the Committee. Its terms of reference are available on the
Company’s web pages: www.schroders.co.uk/satric.
Approach
The Committee’s key roles and responsibilities are set out in the table below.
Oversight of the Manager
The Committee:
• reviews the Manager’s performance, over the short and long
term, against the Reference Index, peer group and the market;
• considers the reporting it has received from the Manager
throughout the year, and the reporting from the Manager to
the shareholders;
• assesses management fees including the performance fee
on an absolute and relative basis, receiving input from the
Company’s broker, including peer group and industry figures,
as well as the structure of the fees;
• reviews the appropriateness of the Manager’s contract,
including terms, such as the notice period;
• visits the Manager’s Asian offices periodically to meet with key
personnel from the Investment Manager; and
• assesses whether the Company receives appropriate
administrative, accounting, company secretarial and marketing
support from the Manager.
Oversight of the Manager
The Committee undertook a detailed review of the Investment
Manager’s performance and agreed that there was the
appropriate depth and quality of resource to deliver superior
returns over the longer term.
The Committee reviewed the terms of the AIFM agreement,
including the fee structure, and agreed they remained fit for
purpose.
The Committee reviewed the other services provided by the
Manager and agreed they were satisfactory.
Oversight of other service providers
The Committee reviews the performance and competitiveness of
the following service providers on at least an annual basis:
• depositary and custodian;
• corporate broker;
• registrar; and
• lender.
The Committee also receives a report from the company
secretary on ancillary service providers, and considers any
recommendations.
The Committee notes the Audit and Risk Committee’s review of
the auditor.
Oversight of other service providers
The Committee conducted a detailed review of each of the
Company’s key service providers, including their anti modern
slavery, anti-bribery, sustainability, diversity and inclusion
policies, and concluded that their continued appointments were
appropriate.
The Committee noted that the Audit and Risk Committee had
undertaken a detailed evaluation of the internal controls of the
Manager, registrar, administrator, depositary and custodian.
Further details are provided in the Audit and Risk Committee
Report.
Application during the year
Recommendations made to, and approved by, the Board:
• That the ongoing appointment of the Manager on the terms of the AIFM agreement, including the fee, was in the best interests of
shareholders as a whole.
• That the performance of the Company’s service providers remained satisfactory.
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Nomination Committee Report
The Nomination Committee is responsible for (1) the recruitment, selection and induction of
Directors, (2) their assessment during their tenure, and (3) the Board’s succession plans.
All Directors are members of the Committee. Sarah MacAulay is the Chair of the Committee. Its terms of reference are available on the
Company’s web pages: www.schroders.co.uk/satric.
Approach
The committee’s key roles and responsibilities are set out in the table below.
Selection and ongoing assessment of Directors
Application of
succession policy
Selection Induction Annual
evaluation
Annual review of
succession policy
Selection and induction
• The Committee prepares a job
specification for each role, and
proposals are sought from independent
search firms. Following evaluation by
the Committee, a firm is selected. For
the Chair and the Chairs of Committees,
the Committee considers current Board
members too.
• A job specification outlines the
knowledge, professional skills, personal
qualities and experience requirements.
• The search firm sources a long list of
potential candidates, who are assessed
against the job specification and the
Company’s diversity policy.
• The Committee discusses the long
list, invites a number of candidates for
interview and makes a recommendation
to the Board.
• The Committee reviews the induction
and training of new Directors.
Board evaluation and Directors’ fees
• The Committee assesses the
performance, composition, diversity and
how effectively members work together
annually and will also consider if an
external evaluation is appropriate.
• The evaluation focuses on whether
each Director continues to demonstrate
commitment to their role and provides
a valuable contribution to the Board
during the year, taking into account time
commitment, independence, conflicts
and training needs.
• Following the evaluation, the Committee
provides a recommendation to
shareholders with respect to the
election or annual re-election of
Directors at the AGM.
• The Committee reviews Directors’ fees,
taking into account comparative data,
and makes a recommendation to the
Board should a change in fees be
considered appropriate.
• Any proposed changes to the
remuneration policy for Directors is
discussed and recommended to the
Board to be proposed to shareholders
for approval at the AGM.
Succession
• Taking into consideration diversity
and the need for regular refreshment,
the Board’s succession policy is that
Directors’ tenure will be for no longer
than nine years, except in exceptional
circumstances, and that each Director
will be subject to annual re-election at
the AGM.
• The Committee reviews the Board’s
current and future succession
requirements at least annually. Should
any need be identified the Committee
will initiate the selection process.
• The Committee oversees the handover
process for retiring Directors and the
induction process for new Directors.
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Application during the year
Selection and induction
• Following her appointment, subsequent
to a rigorous selection process using
independent search firm Cornforth
Consulting, Marion Sears engaged in an
induction programme with the Manager
and its various operating functions.
Board evaluation and Directors’ fees
• The annual Board evaluation, including
evaluation of the Board Committees,
was undertaken in December 2024. The
evaluation was undertaken internally by
the completion of questionnaires.
• The Committee also considered each
Director’s time commitment and
independence by reviewing a complete
list of appointments, including pro bono
not for profit roles, to ensure that each
Director remained free from conflict and
had sufficient time available to discharge
each of their duties effectively. The Chair
of the Audit and Risk Committee led the
review of these matters in respect of the
Chair.
• The Committee was mindful of
the concept of ‘overboarding’ and
considered the time, nature and
complexity of each Director’s other roles
and concluded that it does not believe
that any of the Directors are currently
overboarded.
• The Committee considered each
Director’s contributions, and noted
that in addition to extensive experience
as professionals and non-executive
Directors, each Director had valuable
skills and experience, as detailed in their
biographies on pages 60 and 61.
• All Directors were considered to
be independent in character and
judgement.
• Based on its assessment, the Committee
provided individual recommendations
for each Director’s re-election, at the
AGM to be held in April 2025, with the
exception of Marion Sears, who will seek
election, having been appointed as a
Director in April 2024.
• The Committee reviewed Directors’
fees, using external benchmarking, and
recommended an increase in Directors’
fees, as detailed in the Directors’
Remuneration Report.
Succession
• Following a rigorous selection process,
Marion Sears was appointed to the
Board as a non-executive Director with
effect from 24 April 2024 and will stand
for election as a non-executive Director
at the forthcoming AGM.
• The Committee reviewed the succession
policy and agreed it was still fit for
purpose.
• Following the retirement of Caroline
Hitch as a non-executive Director and
SID at the AGM in 2024, Marion Sears
was appointed as SID in December
2024.
Recommendations made to, and approved by, the Board:
• That Marion Sears be appointed to the Board as a non-executive Director with effect from 24 April 2024 and that her election as a
Director be proposed, and recommended to shareholders for approval, at the 2025 AGM.
• That with effect from 4 December 2024 Marion Sears be appointed as the Company’s SID.
• That all Directors remain independent, continue to demonstrate commitment to their roles, provide a valuable contribution to the
deliberations of the Board, contribute towards the Company’s long-term, sustainable success, and remain free from conflicts with the
Company and its Directors, so should all be recommended for re-election by shareholders at the AGM, with the exception of Marion
Sears, who having been appointed as a non-executive Director in April 2024, would seek election by shareholders at the AGM.
• That Directors’ fees be increased, as detailed in the Directors’ Remuneration Report, with effect from 1 January 2025.
• That the Directors’ Remuneration Report be put to shareholders for approval at the 2025 AGM.
Section 4: Governance
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Directors’ Remuneration Report
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the
year ended 31 December 2024. This Report has been prepared in accordance with Sections
420-422 of the Companies Act 2006 and the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008
The law requires the Company’s auditor to audit certain of the
disclosures provided. Where disclosures have been audited, they
are indicated as such. The auditor’s opinion is included in their
report on pages 78 to 82. The following remuneration policy is
currently in force and is subject to a binding vote every three
years. The next vote will take place at the 2026 AGM and the
current policy provisions will apply until that date. The Directors’
report on remuneration, set out below, is subject to an annual
advisory vote. An ordinary resolution to approve this report will be
put to shareholders at the forthcoming AGM.
At the AGM held on 25 April 2023, 99.91% of the votes cast
(including votes cast at the Chair’s discretion) in respect of
approval of the remuneration policy were in favour, while 0.09%
were against and 59,137 votes were withheld.
At the AGM held on 24 April 2024, 99.89% of the votes cast
(including votes cast at the Chair’s discretion) in respect of
approval of the annual report on remuneration for the year ended
31 December 2023 were in favour, while 0.11% were against and
18,223 votes were withheld.
Directors’ remuneration policy
The determination of the Directors’ fees is a matter dealt with by
the Board and the Nomination Committee.
It is the Board’s policy to determine the level of Directors’
remuneration having regard to amounts payable to non-executive
Directors in the industry generally, the role that individual
Directors fulfil in respect of Board and Committee responsibilities,
and time committed to the Company’s affairs, taking into account
the aggregate limit of fees set out in the Company’s Articles of
Association. This aggregate level of Directors’ fees is currently
set at £300,000 per financial year and any increase in this level
requires approval by the Board and the Company’s shareholders.
The Chair of the Board and the Chair of the Audit and Risk
Committee each receive fees at a higher rate than the other
Directors to reflect their additional responsibilities. Directors’
fees are set at a level to recruit and retain individuals of sufficient
calibre, with the level of knowledge, experience and expertise
necessary, and to promote the success of the Company in
reaching its short and long-term strategic objectives.
The Board and its Committees exclusively comprise non-executive
Directors. No Director past or present has an entitlement to a
pension from the Company and the Company has not, and does
not intend to, operate a share scheme for Directors or to award
any share options or long-term performance incentives to any
Director. No Director has a service contract with the Company;
however Directors have a letter of appointment. Directors
do not receive exit payments and are not provided with any
compensation for loss of office.
Any Director who performs services which in the opinion of
the Directors are outside the scope of the ordinary duties of a
Director, may be paid additional remuneration to be determined
by the Directors, in accordance with the Company’s Articles of
Association. No other payments are made to Directors other
than the reimbursement of reasonable out-of-pocket expenses
incurred in attending to the Company’s business.
Implementation of policy
The terms of Directors’ letters of appointment are available for
inspection at the Company’s registered office address during
normal business hours and during the AGM at the location of
such meeting.
The Board did not seek the views of shareholders in setting this
remuneration policy. Any comments on the policy received from
shareholders would be considered on a case-by-case basis.
As the Company does not have any employees, no employee pay
and employment conditions were taken into account when setting
this remuneration policy and no employees were consulted in its
construction.
Directors’ fees are reviewed annually and take into account
research from third parties on the fee levels of directors of
peer group companies, inflation, as well as industry norms and
factors affecting the time commitment expected of the Directors.
New Directors are subject to the provisions set out in this
remuneration policy.
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Remuneration Report for the year ended 31 December 2024
Fees paid to Directors
The following amounts were paid by the Company to Directors for their services in respect of the year ended 31 December 2024 and
the preceding financial year. Directors’ remuneration is entirely fixed; the Directors do not receive any variable remuneration. The
performance of the Company over the financial year is presented on page 5, under the heading “Performance Summary”.
Fees Taxable benefits
1
Total
Change in annual fee over
years ended 31 December
Director
2024
£
2023
£
2024
£
2023
£
2024
£
2023
£
2024
%
2023
%
2022
%
2021
%
2020
%
Sarah MacAulay (Chair) 49,000 45,000 – 1,584 49,000 46,584 5.2 3.5 (0.4) 9.7 37.3
Jasper Judd
2
43,000 35,269 821 – 43,821 35,269 24.2 n/a n/a n/a n/a
Andrew Cainey 37,000 35,000 53 – 37,053 35,000 5.9 (0.4) (0.9) 0.5 n/a
Marion Sears
3
24,667 – 126 – 24,793 – n/a n/a n/a n/a n/a
Caroline Hitch
4
11,812 35,000 224 314 12,036 35,314 (65.9) 0.4 (0.6) 0.5 15.1
Mike Holt
5
– 13,333 – 952 – 14,285 n/a (64.9) 1.1 (1.2) 11.4
Total 165,479 163,602 1,224 2,850 166,702 166,452
1
Comprise amounts reimbursed for expenses incurred in carrying out business for the Company, and which have been grossed up, to include PAYE and NI
contributions.
2
Appointed as a Director on 1 February 2023 and Chair of the Audit and Risk Committee on 25 April 2023.
3
Appointed as a Director on 24 April 2024 and Senior Independent Director on 4 December 2024.
4
Retired as a Director on 24 April 2024.
5
Retired as a Director and Chair of the Audit and Risk Committee on 25 April 2023.
The information in the above table has been audited.
Consideration of matters relating to Directors’ remuneration
Directors’ remuneration was last reviewed by the Nomination Committee and the Board in December 2024. The members of the Board
at the time that remuneration levels were considered are set out on pages 60 and 61. No external advice was sought in considering
the levels of Directors’ fees, although information on fees paid to Directors of other investment companies managed by Schroders and
peer group companies provided by the Manager and corporate broker was taken into consideration, as was independent third party
research.
Following this review, the Board agreed the Nomination Committee’s recommendation that Directors’ fees should be increased to the
following levels with effect from 1 January 2025: Chair: £50,500; Audit and Risk Committee Chair: £44,000; and Director: £38,000.
The Board will continue to review fees on an annual basis.
Expenditure by the Company on remuneration and distributions to shareholders
The table below compares the remuneration payable to Directors, to distributions made to shareholders during the year under review
and the prior financial year.
In considering these figures, shareholders should take into account the Company’s investment objective.
Year ended
31 December
2024
Year ended
31 December
2023 Change
£’000 £’000 %
Remuneration payable to Directors 167 166 0.6
Distributions paid to shareholders
– Dividends paid during the year 11,036 11,432
– Share buybacks 16,993 32,936
Total distributions paid to shareholders 28,029 44,368 (36.8)
The information in the above table has been audited.
Section 4: Governance
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Performance
A graph showing the Company’s share price total return compared with the Reference Index over the last 10 years is set out below.
The Reference Index has been selected as an appropriate comparison based on the composition of the Company’s investment
portfolio.
Share price and Reference Index total returns
75
100
125
150
175
200
225
250
275
300
325
Dec 14 Dec 15
Dec 16
Dec 17 Dec 18
Dec 19
Dec 20
Dec 21 Dec 22 Dec 23 Dec 24
Reference Index total return
Share price total return
Source: Morningstar/Thomson Reuters. Rebased to 100 at 31 December 2014.
Directors’ share interests
The Company’s Articles of Association do not require Directors to own shares in the Company. The interests of Directors, including
those of connected persons, at the beginning and end of the financial year under review, are set out below.
At 31 December
2024
1
At 31 December
2023
1
Sarah MacAulay 72,475 53,975
Andrew Cainey 26,753 26,753
Jasper Judd 9,280 4,837
Marion Sears
2
10,000 n/a
1
Ordinary shares of 5p each.
2
Marion Sears was appointed as a Director on 24 April 2024.
There have been no changes notified to the Company since the year end.
The information in the above table has been audited.
The Portfolio Managers and their connected persons’ interests in the Company were approximately 500,000 ordinary shares as at the
date of this report.
On behalf of the Board
Sarah MacAulay
Chair
18 March 2025
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Statement of Directors’ Responsibilities
in respect of the Annual Report and Financial
Statements
The Directors are responsible for preparing the Annual Report and the Financial Statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising Financial Reporting
Standard (“FRS”) 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland” and applicable law). Under
company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the return or
loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements and the Directors’ Remuneration
Report comply with the Companies Act 2006.
The Directors are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Manager is responsible for the maintenance and integrity
of the web pages dedicated to the Company. Legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Directors’ Statement
Each of the Directors, whose names and functions are listed on
pages 60 and 61, confirm that to the best of their knowledge:
• the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland” and applicable
law), give a true and fair view of the assets, liabilities, financial
position and net return of the Company;
• the Annual Report and Financial Statements includes a fair
review of the development and performance of the business
and the position of the Company, together with a description of
the principal and emerging risks that it faces; and
• the Annual Report and Financial Statements, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Company’s position and performance, business model and
strategy.
On behalf of the Board
Sarah MacAulay
Chair
18 March 2025
Section 4: Governance
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Section 5: Financials
Independent Auditor’s Report 78
Income Statement 83
Statement of Changes in Equity 84
Statement of Financial Position 85
Cash Flow Statement 86
Notes to the Financial Statements 87
777777
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Independent Auditor’s Report
Opinion
We have audited the financial statements of Schroder Asian Total
Return Investment Company plc (“the Company”) for the year
ended 31 December 2024 which comprise the Income Statement,
the Statement of Changes in Equity, the Statement of Financial
Position, the Cash Flow Statement and the related notes 1 to
23, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards including FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs as at
31 December 2024 and of its profit for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Company and we remain independent
of Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of accounting
included:
• Confirming our understanding of the Company’s going
concern assessment process by engaging with the Directors
and the company secretary to determine if all key factors were
considered in their assessment.
• Inspecting the Directors’ assessment of going concern,
including the revenue forecast and liquidity assessment, for
the period to 31 March 2026 which is at least 12 months from
the date these financial statements are authorised for issue. In
preparing the revenue forecast, the Company has concluded
that it is able to continue to meet its ongoing costs as they fall
due.
• Reviewing the factors and assumptions, including the impact
of the current economic environment and other significant
events that could give rise to market volatility, as applied
to the revenue forecast and the liquidity assessment of the
investments. We considered the appropriateness of the
methods used to calculate the revenue forecast and the
liquidity assessment and determined, through testing of the
methodology and calculations, that the methods, inputs and
assumptions utilised were appropriate to be able to make an
assessment for the Company.
• Considering the mitigating factors included in the revenue
forecast that are within the control of the Company. We
reviewed the Company’s assessment of the liquidity of
investments held and evaluated the Company’s ability to sell
those investments to cover the working capital requirements
should revenue decline significantly.
• In relation to the Company’s borrowing arrangements,
inspecting the Directors’ assessment of the level of gearing. We
recalculated the Company’s compliance with debt covenants
and performed stress testing to assess the likelihood of the
Company breaching the financial covenants as a result of a
reduction in the value of the Company’s portfolio.
• Assessing the impact of the upcoming continuation vote at
the April 2025 AGM on the going concern basis of preparation,
by considering the current and historical performance of
the Company and making enquiries regarding the Broker’s
discussion with certain shareholders about their current
intentions in relation to the continuation vote and discussing
the responses the Broker received with the Directors.
• Reviewing the Company’s going concern disclosures included in
the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for the period
assessed by Directors, being the period to 31 March 2026, which
is at least 12 months from the date these financial statements are
authorised for issue.
In relation to the Company’s reporting on how they have applied
the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in
the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report. However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the
Company’s ability to continue as a going concern.
Overview of our audit approach
Key audit matters • Risk of incomplete or inaccurate revenue
recognition, including the classification
of special dividends as revenue or
capital items in the Income Statement
• Risk of incorrect valuation or ownership
of the investment portfolio.
Materiality • Overall materiality of £4.76m which
represents 1% of shareholders’ funds.
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Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has determined
that the most significant future impacts from climate change could affect the Company’s investments and the overall investment
process. This is explained in the Risk Report on page 52, which forms part of the “Other information,” rather than the audited financial
statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent
with the financial statements, or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements
as set out in note 1(a) and conclusion that there was no material impact of climate change on the valuation of investments. We also
challenged the Directors’ considerations of climate change risks in their assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends as
revenue or capital items in the Income
Statement (as described on page 66 in
the Audit and Risk Committee’s Report and
as per the accounting policy set out on
page 87)
The total revenue for the year to
31 December 2024 was £12.39m (2023:
£13.75m), consisting primarily of dividend
income from listed equity investments.
The Company received nine special
dividends amounting to £0.49m (2023:
£2.24m), of which £0.36m (2023: £0.60m)
was classified as revenue and £0.13m
(2023: £1.64m) was classified as capital.
There is a risk of incomplete or inaccurate
recognition of revenue through the failure
to recognise proper income entitlements
or to apply an appropriate accounting
treatment.
The Directors may be required to exercise
judgement in determining whether income
receivable in the form of special dividends
should be classified as ‘revenue’ or ‘capital’
in the Income Statement.
We performed the following
procedures:
We obtained an understanding of the
processes and controls surrounding
revenue recognition, including the
classification of special dividends by
performing walkthrough procedures.
For 100% of dividends received and
accrued, we recalculated the dividend
income by multiplying the investment
holdings at the ex-dividend date, traced
from the accounting records, by the
dividend per share, which was agreed
to an independent data vendor. We
also agreed all exchange rates to an
independent data vendor and agreed a
sample of dividends received and accrued
to bank statements, where paid.
For 100% of dividends accrued, we
reviewed the investee company
announcement to assess whether the
dividend entitlements arose prior to 31
December 2024.
To test completeness of recorded income,
we verified that expected dividends for
each investee company held during
the year had been recorded as income
with reference to investee company
announcements obtained from an
independent external source.
For 100% of investments held during the
year, we reviewed the type of dividends
paid with reference to an external data
vendor to identify those which were special
dividends.
For a sample of special dividends,
we assessed the appropriateness of
management’s classification as revenue
or capital by reviewing the underlying
rationale for the distributions.
The results of our procedures identified
no material misstatement in relation
to the risk of incomplete or inaccurate
revenue recognition, including incorrect
classification of special dividends as
revenue or capital items in the Income
Statement.
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Risk Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Incorrect valuation or ownership
of the investment portfolio (as
described on page 66 in the Audit and
Risk Committee’s Report and as per the
accounting policy set out on page 87)
The valuation of the investment portfolio
at 31 December 2024 was £506.93m
(2023: £484.01m) consisting primarily of
listed investments.
The valuation of the investments held
by the Company is the key driver of the
Company’s net asset value and total
return. Incorrect investment pricing, or
a failure to maintain proper legal title of
the assets held by the Company, could
have a significant impact on the net
asset value and the return generated for
shareholders.
The fair value of listed investments is
determined using quoted market bid
prices at close of each market on the
accounting date, for investments traded in
active markets.
The CFDs held in the portfolio are valued
based on the price of the underlying
security or index which they are purchased
to reflect. The fair value of the CFDs is the
difference between the strike price and the
underlying shares in the contract.
We performed the following
procedures:
We obtained an understanding of the
processes surrounding investment pricing
and legal title of listed investments by
performing walkthrough procedures.
For 100% of investments in the portfolio,
including exchange traded derivatives we
verified the market prices and exchange
rates applied from an independent pricing
vendor and recalculated the investment
valuations as at the year end.
For 100% of the CFDs in the portfolio,
we verified the market prices for the
underlying investments and exchange
rates applied from an independent pricing
vendor and recalculated the valuations as
at year end.
We inspected the stale pricing reports
produced by the Administrator to identify
prices for any listed investments that have
not changed around the year-end to verify
whether the listed price is a valid fair value
through review of trading activity. No stale
prices were identified.
We compared the Company’s investment
holdings and derivative positions as at
31 December 2024 to an independent
confirmation received directly from the
Company’s Custodian and Depositary,
testing any reconciling items to supporting
documentation.
The results of our procedures identified no
material misstatement in relation to the
risk of incorrect valuation or ownership of
the investment portfolio.
There have been no changes to the areas of audit focus raised in the above risk table from prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Company to be £4.76 million (2023: £4.48 million), which is1% (2023: 1%) of shareholders’ funds. We
believe that shareholders’ funds provides us with materiality aligned to the key measurement of the Company’s performance.
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Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2023:
75%) of our planning materiality, namely £3.57m (2023: £3.36m).
We have set performance materiality at this percentage due
to our past experience of working with the Company which
therefore indicates a lower risk of misstatements, both corrected
and uncorrected.
Given the importance of the distinction between revenue and
capital for investment trusts, we also applied a separate testing
threshold for the revenue column of the Income Statement of
£0.50m (2023: £0.57m), being 5% of the revenue return before
taxation.
Reporting threshold
An amount below which identified misstatements are considered as
being clearly trivial.
We agreed with the Audit and Risk Committee that we would
report to them all uncorrected audit differences in excess of
£0.24m (2023: £0.22m), which is set at 5% of planning materiality,
as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our
opinion.
Other information
The other information comprises the information included in
the annual report other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion
thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the Directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the
audit:
• the information given in the strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and Directors’ reports have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the Company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
• the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with
the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code specified for
our review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 75;
• Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 75;
• Director’s statement on whether it has a reasonable
expectation that the group will be able to continue in operation
and meets its liabilities set out on page 75;
• Directors’ statement on fair, balanced and understandable set
out on page 75;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 52;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 52 and;
• The section describing the work of the Audit and Risk
committee set out on page 66.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement
set out on page 75, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
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concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance
of the Company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and
determined that the most significant are UK GAAP, the
Companies Act 2006, the UK Listing Rules, the UK Corporate
Governance Code, the Statement of Recommended Practice
for the Financial Statements of Investment Trust Companies
as issued by the Association of Investment Companies, Section
1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying with those
frameworks through discussions with the Audit and Risk
Committee and company secretary, review of Board and
Committee minutes and review of papers provided to the Audit
and Risk Committee.
• We assessed the susceptibility of the Company’s financial
statements to material misstatement, including how fraud
might occur by considering the key risks impacting the
financial statements. We identified a fraud risk with respect
to incomplete or inaccurate revenue recognition through
incorrect classification of special dividends as revenue or capital
items in the Income Statement. Further discussion of our
approach is set out in the section on key audit matters above.
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved review of the reporting to
the Directors with respect to the application of the documented
policies and procedures and review of the financial statements
to ensure compliance with the reporting requirements of the
Company.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit and Risk
committee, we were appointed by the Company on 6
September 2019 to audit the financial statements for the year
ending 31 December 2019 and subsequent financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is six years, covering
the years ending 31 December 2019 to 31 December 2024.
• The audit opinion is consistent with the additional report to the
Audit and Risk Committee.
Use of our report
This report is made solely to the Company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report,
or for the opinions we have formed.
James Beszant
Senior statutory auditor
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
18 March 2025
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Income Statement
for the year ended 31 December 2024
Note
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Gains on investments held at fair value through profit or loss 2 – 53,179 53,179 – 28,264 28,264
Net gains/(losses) on derivative contracts – 1,338 1,338 – (1,991) (1,991)
Net foreign currency (losses)/gains – (596) (596) – 1,846 1,846
Income from investments 3 12,281 128 12,409 13,568 1,639 15,207
Other interest receivable and similar income 3 106 – 106 180 – 180
Gross return 12,387 54,049 66,436 13,748 29,758 43,506
Management fee 4 (794) (2,382) (3,176) (763) (2,288) (3,051)
Performance fee 4 – (2,767) (2,767) – – –
Administrative expenses 5 (1,025) – (1,025) (862) – (862)
Net return before finance costs and taxation 10,568 48,900 59,468 12,123 27,470 39,593
Finance costs 6 (494) (1,482) (1,976) (695) (2,084) (2,779)
Net return before taxation
10,074 47,418 57,492 11,428 25,386 36,814
Taxation
7 (910) (961) (1,871) (931) (505) (1,436)
Net return after taxation 9,164 46,457 55,621 10,497 24,881 35,378
Return per share (pence) 8 9.61 48.71 58.32 10.26 24.33 34.59
The “Total” column of this statement is the profit and loss account of the Company. The “Revenue” and “Capital” columns represent
supplementary information prepared under guidance issued by the AIC. The Company has no other items of other comprehensive
income, and therefore the net return/(loss) after taxation is also the total comprehensive income/(loss) for the year.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued
in the year.
The notes on pages 87 to 102 form an integral part of these financial statements.
Section 5: Financials
83
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Statement of Changes in Equity
for the year ended 31 December 2024
Note
Called-up
share
capital
£’000
Shar
e
premium
£’000
Capital
redemption
reserve
£’000
Share
purchase
reserve
£’000
Capital
reserves
£’000
Revenue
reserve
£’000
Total
£’000
At 31 December 2022 5,456 114,656 11,646 29,182 270,838 25,696 457,474
Repurchase of the Company's own shares into
treasury – – – – (32,936) – (32,936)
Net return after taxation – – – – 24,881 10,497 35,378
Dividend paid in the year 9 – – – – – (11,432) (11,432)
At 31 December 2023 5,456 114,656 11,646 29,182 262,783 24,761 448,484
Repurchase of the Company's own shares into
treasury – – – – (16,993) – (16,993)
Net return after taxation – – – – 46,457 9,164 55,621
Dividend paid in the year 9 – – – – – (11,036) (11,036)
At 31 December 2024 5,456 114,656 11,646 29,182 292,247 22,889 476,076
The notes on pages 87 to 102 form an integral part of these financial statements.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Statement of Financial Position
at 31 December 2024
Note
2024
£’000
2023
£’000
Fixed assets
Investments held at fair value through profit or loss 10 506,932 484,012
Current assets
Debtors 11
303 1,194
Cash and cash equivalents 11 1,743 2,527
Derivative financial instruments held at fair value through profit or loss 11 993 178
3,039 3,899
Current liabilities
Creditors: amounts falling due within one year 12 (32,344) (38,841)
(32,344) (38,841)
Net current liabilities (29,305) (34,942)
Total assets less current liabilities 477,627 449,070
Non current liabilities
Deferred taxation 13 (1,551) (586)
Net assets 476,076 448,484
Capital and reserves
Called-up share capital 14 5,456 5,456
Share premium 15 114,656 114,656
Capital redemption reserve 15 11,646 11,646
Special reserve 15 29,182 29,182
Capital reserve 15 292,247 262,783
Revenue reserve 15 22,889 24,761
Total equity shareholders’ funds 476,076 448,484
Net asset value per share (pence) 16 509.04 461.24
These financial statements were approved and authorised for issue by the Board of Directors on 18 March 2025 and signed on its
behalf by:
Sarah MacAulay
Chair
The notes on pages 87 to 102 form an integral part of these financial statements.
Registered in England and Wales as a public company limited by shares.
Company registration number: 02153093.
Section 5: Financials
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Note
2024
£’000
2023
£’000
Net cash inflow from operating activities 17 7,409 10,928
Investing activities
Purchases of investments (106,492) (115,573)
Sales of investments 137,445 158,529
Net cash flows on derivative instruments 1,520 (2,169)
Net cash inflow from investing activities 32,473 40,787
Net cash inflow before financing 39,882 51,715
Financing activities
Dividends paid (11,036) (11,432)
Interest paid (2,090) (2,732)
Bank loans repayment (15,484) (6,530)
Repurchase of the Company's own shares into treasury (16,736) (33,222)
Net cash outflow from financing activities (45,346) (53,916)
Net cash outflow in the year 18 (5,464) (2,201)
Cash and cash equivalents at the beginning of the year 2,527 5,161
Change in cash and cash equivalents (5,464) (2,201)
Exchange movements (94) (433)
Cash and cash equivalents at the end of the year (3,031) 2,527
Represented by:
Cash at bank and derivative clearing houses 1,743 2,527
Overdraft at bank and derivative clearing houses (4,774) –
Cash and cash equivalents at the end of the year (3,031) 2,527
Dividends received during the year amounted to £12,488,000 (2023: £15,263,000), deposit interest and other income receipts
amounted to £108,000 (2023: £178,000).
The notes on pages 87 to 102 form an integral part of these financial statements.
Cash Flow Statement
for the year ended 31 December 2024
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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Notes to the Financial Statements
for the year ended 31 December 2024
1. Accounting Policies
(a) Basis of accounting
Schroder Asian Total Return Investment Company plc (“the Company”) is registered in England and Wales as a public company limited
by shares. The Company’s registered office is 1 London Wall Place, London EC2Y 5AU.
The financial statements are prepared in accordance with the Companies Act 2006, United Kingdom Generally Accepted Accounting
Practice (UK GAAP), in particular in accordance with Financial Reporting Standard (FRS) 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland”, and with the Statement of Recommended Practice “Financial Statements of Investment
Trust Companies and Venture Capital Trusts” (the “SORP”) issued by The Association of Investment Companies in July 2022. All of the
Company’s operations are of a continuing nature.
The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the
revaluation of investments and derivative financial instruments held at fair value through profit or loss. The Directors believe that
the Company has adequate resources to continue operating for the period to 31 March 2026, which is at least 12 months from the
date of approval of these financial statements. In forming this opinion, the Directors have taken into consideration: the controls and
monitoring processes in place; the Company’s low level of debt and other payables; the low level of operating expenses, comprising
largely variable costs which would reduce pro rata in the event of a market downturn; and that the Company’s assets comprise cash
and readily realisable securities quoted in active markets. In forming this opinion, the Directors have also considered any potential
impact of climate change on the viability of the Company. Further details of Directors’ considerations regarding any potential impact
of climate change are given in the Chair’s Statement, Investment Managers’ Review, Going Concern Statement, Viability Statement and
under the Risk Report heading on page 52.
In preparing these financial statements the Directors have also considered the impact of climate change on the value of the listed
investments that the Company holds. As the portfolio consists of listed equities, which are valued using quoted bid prices for
investments in an active market, then fair value reflects market participants view of climate change risk.
The financial statements are presented in sterling and amounts have been rounded to the nearest thousand.
The accounting policies applied to these financial statements are consistent with those applied in the financial statements for the year
ended 31 December 2023.
No significant judgements, estimates or assumptions have been required in the preparation of the financial statements for the current
or prior financial year.
(b) Valuation of investments
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital
growth. This portfolio of financial assets and derivative financial instruments is managed, and its performance evaluated, on a fair value
basis, in accordance with a documented investment strategy and information is provided internally on that basis to the Company’s
Board of Directors. Accordingly, upon initial recognition the investments are classified by the Company as “held at fair value through
profit or loss”. Investments are included initially at transaction price, excluding expenses incidental to purchase, which are written off
to capital at the time of acquisition. Subsequently, investments are valued at fair value, which are quoted bid prices at the close of each
market on the accounting date, for investments traded in active markets.
The contracts for difference (“CFD”) held in the portfolio are valued based on the price of the underlying security or index which they are
purchased to reflect. The fair value of the CFDs is the difference between the strike price and the underlying shares in the contract.
All purchases and sales are accounted for on a trade date basis.
(c) Accounting for reserves
Gains and losses on sales of investments are included in the Income Statement and in capital reserves within “gains and losses on sales
of investments”. Increases and decreases in the valuation of investments held at the year end are included in the Income Statement
and in capital reserves within “holding gains and losses on investments”.
Gains and losses on sales of CFDs and increases and decreases in the valuation of CFDs are included “in the statement of
comprehensive income and in capital reserves within “net gains on derivative contracts.”
Foreign exchange gains and losses on cash and deposit balances and unrealised exchange gains and losses on foreign currency loans
are included in the Income Statement and in capital reserves.
The cost of repurchasing the Company’s own shares for cancellation or to hold in treasury, including the related stamp duty and
transactions costs is charged to a distributable capital reserve.
Section 5: Financials
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(d) Income
Dividends receivable are included in revenue on an ex-dividend basis except where, in the opinion of the Board, the dividend is capital
in nature, in which case it is included in capital.
Dividends from overseas companies are included gross of any withholding tax.
Where the Company has elected to receive dividends in the form of additional shares rather than in cash, the amount of the cash
dividend foregone is recognised in revenue. Any excess in the value of the shares received over the amount of the cash dividend is
recognised in capital.
Deposit interest outstanding at the year end is calculated and accrued on a time apportionment basis using market rates of interest.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated wholly to the revenue column of the Income Statement
with the following exceptions:
• The management fee is allocated 25% to revenue and 75% to capital in line with the Board’s expected long-term split of revenue and
capital return from the Company’s investment portfolio.
• Any performance fee is allocated 100% to capital.
• Expenses incidental to the purchase or sale of an investment are charged to capital. These expenses are commonly referred to as
transaction costs and mainly comprise brokerage commission. Details of transaction costs are given in note 10 on page 92.
(f) Finance costs
Finance costs, including collateral and finance costs paid on CFDs, any premiums payable on settlement or redemption and direct issue
costs, are accounted for on an accruals basis using the effective interest method in accordance with FRS 102.
Finance costs are allocated 25% to revenue and 75% to capital in line with the Board’s expected long-term split of revenue and capital
return from the Company’s investment portfolio.
(g) Other financial instruments
Cash and cash equivalents may comprise cash, amounts held at derivative clearing houses and demand deposits which are readily
convertible to a known amount of cash and are subject to insignificant risk of changes in value.
Other debtors and creditors do not carry any interest, are short-term in nature and are accordingly stated at nominal value, with
debtors reduced by appropriate allowances for estimated irrecoverable amounts.
Bank loans are classified as financial liabilities at amortised cost. They are initially measured at the proceeds received, net of direct issue
costs, and subsequently measured at amortised cost using the effective interest method.
Forward foreign currency contracts are held at fair value through profit or loss based on the gain or loss if the contracts had been
closed out at the accounting date, at prevailing market rates.
(h) Taxation
The tax charge for the year includes a provision for all amounts expected to be received or paid.
Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date.
Deferred tax liabilities are recognised for all taxable timing differences but deferred tax assets are only recognised to the extent that it
is probable that taxable profits will be available against which those timing differences can be utilised.
Deferred tax is measured at the tax rate which is expected to apply in the periods in which the timing differences are expected
to reverse, based on tax rates that have been enacted or substantively enacted at the balance sheet date and is measured on an
undiscounted basis.
(i) Value added tax (VAT)
Expenses are disclosed inclusive of any related irrecoverable VAT.
(j) Foreign currency
In accordance with FRS 102, the Company is required to determine a functional currency, being the currency in which the Company
predominantly operates. The Board, having regard to the currency of the Company’s share capital and the predominant currency
in which its shareholders operate, has determined that sterling is the functional currency and the currency in which the financial
statements are presented.
Transactions denominated in foreign currencies are converted at actual exchange rates as at the date of the transaction. Monetary
assets, liabilities and equity investments, denominated in foreign currencies at the year end, are translated at the rates of exchange
prevailing at the year end.
(k) Dividends payable
In accordance with FRS 102, the final dividend is included in the financial statements in the year in which it is approved by shareholders.
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 5: Financials
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(l) Repurchases of shares into treasury and subsequent reissues
The cost of repurchasing the Company’s shares into treasury, including the related stamp duty and transaction costs is dealt with in the
Statement of Changes in Equity and is charged to capital reserves. Share repurchase transactions are accounted for on a trade date basis.
The sales proceeds of treasury shares reissued are treated as a realised profit up to the amount of the purchase price of those shares
and is transferred to capital reserves. The excess of the sales proceeds over the purchase price is transferred to “share premium”.
2. Gains on investments held at fair value through profit or loss
2024
£’000
2023
£’000
Gains on sales of investments based on historic cost 19,679 22,776
Amounts recognised in investment holding gains and losses in the previous year in respect of investments sold in the
year (22,801) (21,733)
(Losses)/gains on sales of investments based on the carrying value at the previous balance sheet date (3,122) 1,043
Unrealised gains recognised in respect of investments continuing to be held 56,301 27,221
Gains on investments held at fair value through profit or loss 53,179 28,264
3. Income
2024
£’000
2023
£’000
Income from investments
Overseas dividends 11,922 12,934
Overseas special dividends 359 601
Stock dividend – 33
12,281 13,568
Other interest receivable and similar income
Deposit interest 27 180
Other income 79 –
106 180
12,387 13,748
Capital
Special dividend allocated to capital 128 1,639
4. Management and performance fees
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Management fee 794 2,382 3,176 763 2,288 3,051
Performance fee – 2,767 2,767 – – –
794 5,149 5,943 763 2,288 3,051
The bases for calculating the investment management and performance fees are set out in the Directors’ Report on page 63 and
details of all amounts payable to the Manager are given in note 19 on page 96.
Section 5: Financials
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5. Administrative expenses
2024
£’000
2023
£’000
Custody fees 243 208
Administration expenses 491 363
Directors’ fees
1
165 164
Secretarial fee 75 75
Auditor’s remuneration
2
51 52
1,025 862
1
Details of all amounts payable to Directors are given in the Directors’ Remuneration Report on page 73.
2
No amounts are payable to the auditor for non-audit services.
6. Finance costs
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Interest on bank loans and overdrafts 494 1,482 1,976 695 2,084 2,779
7. Taxation
(a) Analysis of tax charge for the year
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Irrecoverable overseas tax 910 – 910 931 – 931
Overseas capital gains tax – 961 961 – 505 505
Taxation for the year 910 961 1,871 931 505 1,436
The Company has no corporation tax liability for the year (2023: nil).
The overseas capital gains tax relates to the deferred tax liability on unrealised gains on Indian investments held at the year end.
(b) Factors affecting tax charge for the year
The standard rate of corporation tax in the UK is 25%, effective from 1 April 2023. Accordingly, the Company’s profits for this accounting
year would be taxed at a rate of 25% (2023: 23.5%). However the corporation tax charge for the year is nil (2023: nil), as dividends
and capital gains are not subject to corporation tax. The tax charge comprises irrecoverable withholding tax deducted at source from
dividends receivable and overseas capital gains tax.
The table below shows how taxable income is reduced to zero by reconciling the expected corporation tax due on the net return before
tax based on current tax rates, to the actual tax charge for the year.
2024
Revenue
£’000
2024
Capital
£’000
2024
Total
£’000
2023
Revenue
£’000
2023
Capital
£’000
2023
Total
£’000
Net return on ordinary activities before taxation 10,074 47,418 57,492 11,428 25,386 36,814
Net return on ordinary activities before taxation multiplied by the
Company’s applicable rate of corporation tax for the year of 25%
(2023: 23.5%) 2,519 11,855 14,374 2,686 5,966 8,652
Effects of:
Capital gains on investments – (13,480) (13,480) – (6,608) (6,608)
Income not subject to taxation (3,049) (32) (3,081) (3,161) (385) (3,546)
Overseas capital gains tax – 961 961 – 505 505
Irrecoverable overseas tax 910 – 910 931 – 931
Unrelieved expenses 530 1,657 2,187 475 1,027 1,502
Tax on ordinary activities 910 961 1,871 931 505 1,436
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(c) Deferred taxation
The Company has an unrecognised deferred tax asset of £19,925,000 (2023: £17,738,000) based on a prospective corporation tax rate
of 25% (2023: 25%).
This deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition
of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been
recognised in the financial statements.
Given the Company’s intention to meet the conditions required to retain its status as an investment trust company, no provision has
been made for UK capital gains tax on any capital gains or losses arising on the revaluation or disposal of investments. Please refer to
note 13 for details of the deferred taxation in relation to overseas capital gains tax.
8. Return per share
2024
£’000
2023
£’000
Revenue return 9,164 10,497
Capital return 46,457 24,881
Total return 55,621 35,378
Weighted average number of shares in issue during the year 95,376,796 102,272,753
Revenue return per share (pence) 9.61 10.26
Capital return per share (pence) 48.71 24.33
Total return per share (pence) 58.32 34.59
9. Dividends
(a) Dividends paid and declared
2024
£’000
2023
£’000
2023 final dividend of 11.5p (2022: 11.0p), paid out of revenue profits
1
11,036 11,432
2024
£’000
2023
£’000
2024 final dividend proposed of 11.5p (2023: 11.5p), to be paid out of revenue profits 10,755 11,182
1
The 2023 final dividend amounted to £11,182,000. However the amount actually paid was £11,036,000, as shares were repurchased into treasury after the
accounting date but prior to the dividend record date.
(b) Dividends for the purposes of Section 1158 of the Corporation Tax Act 2010 (“Section 1158”)
The requirements of Section 1158 are considered on the basis of dividends declared in respect of the financial year as shown below.
The revenue available for distribution by way of dividend for the year is £9,164,000 (2023: £10,497,000).
2024
£’000
2023
£’000
Final dividend of 11.5p (2023: 11.5p) 10,755 11,182
Section 5: Financials
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10. Investments held at fair value through profit or loss
(a) Movement in investments
2024
£’000
2023
£’000
Opening book cost 370,259 391,040
Opening investment holding gains 113,753 108,265
Opening fair value 484,012 499,305
Analysis of transactions made during the year
Purchases at cost 106,370 115,788
Sales proceeds (136,629) (159,345)
Gains on investments held at fair value 53,179 28,264
Closing fair value 506,932 484,012
Closing book cost 359,679 370,259
Closing investment holding gains 147,253 113,753
Closing fair value 506,932 484,012
Sales proceeds amounting to £136,629,000 (2023: £159,345,000) were receivable from disposals of investments in the year. The book
cost of these investments when they were purchased was £116,950,000 (2023: £136,568,000). These investments have been revalued
over time and until they were sold any unrealised gains and losses were included in the fair value of the investments.
(b) Transaction costs
The following transaction costs, mainly comprising brokerage commissions, were incurred during the year:
2024
£’000
2023
£’000
On acquisitions 123 170
On disposals 248 264
371 434
(c) Contracts for Difference
CFDs held at 31 December:
2024
Asset
exposure
£’000
2024
Fair
value
£’000
2023
Asset
exposure
£’000
2023
Fair
value
£’000
CFD assets 4,013 30 – –
CFD liabilities 11,294 (254) – –
15,307 (224) – –
The CFDs are held as a cost effective and flexible form of borrowing. The total market exposure on the CFDs held at the year end is
£15,307,000 (2023: £nil) and the notional value attached to these CFDs is £15,531,000 (2023: £nil). This resulted in an unrealised loss of
£224,000 (2023: £nil).
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11. Current assets
Debtors
2024
£’000
2023
£’000
Dividends and interest receivable 275 346
Securities sold awaiting settlement – 816
Taxation recoverable 2 8
Other debtors 26 24
303 1,194
The Directors consider that the carrying amount of debtors approximates to their fair value.
Cash and cash equivalents
2024
£’000
2023
£’000
Cash at bank 627 2,502
Amounts held at derivative clearing houses and brokers 1,116 25
1,743 2,527
The carrying amount of cash represents its fair value. No cash equivalents were held at the year end (2023: same).
Derivative financial instruments held at fair value through profit or loss
2024
£’000
2023
£’000
CFD assets 30 –
Forward currency contracts 458 –
Index put options 505
178
993 178
Details of the CFDs, forward currency contracts and index put options held at the year end are given on pages 34 to 36.
12. Current liabilities
Creditors: amounts falling due within one year
2024
£’000
2023
£’000
Bank loan 22,357 37,339
Bank overdraft 4,534 –
Amounts held at derivative clearing houses and brokers 240 –
Derivative financial instruments held at fair value through profit or loss - CFD liabilities 254 –
Securities purchases awaiting settlement – 122
Amounts payable on settlement of derivatives 743 –
Repurchase of ordinary shares into treasury awaiting settlement 255
–
Other creditors and accruals 3,961 1,380
32,344 38,841
The Directors consider that the carrying amount of creditors falling due within one year approximates to their fair value.
The bank loan comprises USD28 million (2023: USD47.6 million) drawn down on the Company’s £75 million (2023: £75 million), 364 day
multicurrency credit facility with The Bank of Nova Scotia, London Branch, expiring July 2025. The facility was secured from amendment
and restatement on 18 July 2024 and is subject to covenants and restrictions which are customary for a facility of this nature, all of
which have been complied with during the year.
Further details of this facility are given in note 22(a)(ii) on page 99.
Section 5: Financials
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13. Deferred taxation
Deferred taxation comprises the deferred tax liability on the unrealised gains on Indian investments. Indian capital gains tax crystallises
on disposal of the underlying asset and is charged based on a 12 month holding period of the asset. The current rate of tax is 12.5%
(plus applicable surcharge and cess) for holdings over 12 months and 20% (plus applicable surcharge and cess) for holdings under 12
months. At the end of the prior year, the rate of tax was 10% (plus applicable surcharge and cess) for holdings over 12 months or 15%
(plus applicable surcharge and cess) for holdings under 12 months.
The provision for deferred taxation at the year end was £1,551,000 (2023: £586,000).
14. Called-up share capital
2024
£’000
2023
£’000
Ordinary shares allotted, called up and fully paid:
Opening balance of 97,234,120 (2023: 105,263,203) shares 4,862 5,263
Repurchase of 3,709,666 (2023: 8,029,083) shares into treasury (186) (401)
Subtotal of 93,524,454 (2023: 97,234,120) shares 4,676 4,862
15,590,197 (2023: 11,880,531) shares held in treasury 780
594
Closing balance
1
5,456 5,456
1
Represents 109,114,651 (2023: 109,114,651) shares of 5p each, including 15,590,197 (2023: 11,880,531) held in treasury.
During the year, the Company repurchased 3,709,666 of its own shares, nominal value £186,000, to hold in treasury, representing 3.8%
of the shares outstanding at the beginning of the year. The total consideration paid for these shares amounted to £16,993,000. The
reason for these purchases was to seek to manage the volatility of the share price discount to NAV per share.
15. Reserves
Capital reserves
Year ended 31 December 2024
Share
premium
1
£’000
Capital
redemption
reserve
2
£’000
Special
reserve
3
£’000
Gains and
losses on
sales of
investments
4
£’000
Investment
holding
gains and
losses
5
£’000
Revenue
reserve
6
£’000
At 31 December 2023 114,656 11,646 29,182 151,707 111,076 24,761
Losses on sales of investments based on the carrying value at the
previous balance sheet date – – – (3,122) – –
Unrealised gains recognised in respect of investments continuing
to be held – – – – 56,301 –
Transfer on disposal of investments – – – 22,801 (22,801) –
Gains on derivatives – – – 497 841 –
Realised exchange losses on cash and short-term deposits – – – (94) – –
Exchange (losses)/gains on foreign currency loans – – – (806) 304 –
Special dividend allocated to capital – – – 128 – –
Repurchase of shares into treasury – – – (16,993) – –
Performance fee allocated to capital – – – (2,767) – –
Management fee and finance costs allocated to capital – – – (3,864) – –
Overseas capital gains tax – – – – (961) –
Dividend paid – – – – – (11,036)
Retained revenue for the year – – – – – 9,164
At 31 December 2024 114,656 11,646 29,182 147,487 144,760 22,889
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
Section 5: Financials
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Capital reserves
Year ended 31 December 2023
Share
premium
1
£’000
Capital
redemption
reserve
2
£’000
Special
reserve
3
£’000
Gains and
losses on
sales of
investments
4
£’000
Investment
holding
gains and
losses
5
£’000
Revenue
reserve
6
£’000
At 31 December 2022 114,656 11,646 29,182 167,204 103,634 25,696
Losses on sales of investments based on the carrying value at the
previous balance sheet date – – – 1,043 – –
Unrealised gains recognised in respect of investments continuing
to be held – – – – 27,221 –
Transfer on disposal of investments – – – 21,733 (21,733) –
Losses on derivatives – – – (1,627) (364) –
Realised exchange losses on cash and short-term deposits – – – (433) – –
Exchange (losses)/gains on foreign currency loans – – – (632) 2,911 –
Special dividend allocated to capital – – – 1,639 – –
Repurchase of shares into treasury – – – (32,936) – –
Management fee and finance costs allocated to capital – – – (4,372) – –
Overseas capital gains tax – – – 88 (593) –
Dividend paid – – – – – (11,432)
Retained revenue for the year – – – – – 10,497
At 31 December 2023 114,656 11,646 29,182 151,707 111,076 24,761
1
The share premium is a non distributable reserve and represents the amount by which the fair value of the consideration received from shares issued exceeds
the nominal value of shares issued.
2
The capital redemption reserve represents the accumulated nominal value of shares repurchased for cancellation. This reserve is not distributable.
3
This is a distributable capital reserve arising from the cancellation of the share premium, and may be distributed as dividends or used to repurchase the
Company’s own shares.
4
This is a realised (distributable) capital reserve and a positive balance may be used to repurchase the Company’s own shares or distributed as dividends.
5
This reserve may include some holding gains on liquid investments (which may be deemed to be realised) and other amounts which are unrealised. An analysis
has not been made between those amounts that are realised (and may be distributed as dividends or used to repurchase the Company’s own shares) and
those that are unrealised.
6
A positive balance on the revenue reserve may be distributed as dividends or used to repurchase the Company’s own shares.
1
6. Net asset value per share
2024
£’000
2023
£’000
Total equity shareholders’ funds (£’000) 476,076 448,484
Shares in issue at the year end 93,524,454 97,234,120
Net asset value per share (pence) 509.04 461.24
Section 5: Financials
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17. Reconciliation of total return on ordinary activities before finance costs and taxation to
net cash inflow from operating activities
2024
£’000
2023
£’000
Total return on ordinary activities before finance costs and taxation 59,468 39,593
Less capital returns on ordinary activities before finance costs and taxation (48,900) (27,470)
Decrease in prepayments and accrued income 82 146
Decrease in other debtors 4
1
Increase in other creditors 2,694 258
Special dividends allocated to capital 128 1,639
Less stock and accumulation dividends – (93)
Management fee allocated to capital (2,382) (2,288)
Performance fee allocated to capital (2,767) –
Overseas withholding tax deducted at source (918) (858)
Net cash inflow from operating activities 7,409 10,928
18. Analysis of changes in net debt
2023
£’000
Cash flow
£’000
Exchange
movements
£’000
2024
£’000
Cash and cash equivalents 2,527 (692) (92) (1,743)
Bank loan (37,339) 15,484 (502) (22,357)
Overdraft at bank and derivative clearing houses – (4,772) (2) (4,774)
Net debt (34,812) 10,020 (596) (25,388)
19. Transactions with the Manager
Under the terms of the Alternative Investment Fund Manager Agreement, the Manager is entitled to receive management, secretarial
and performance fees. Details of the basis of these calculations are given in the Directors’ Report on page 63. If the Company invests
in funds managed or advised by the Manager, any fees earned by the Manager are rebated to the Company. The management
fee payable in respect of the year ended 31 December 2024 amounted to £3,176,000 (2023: £3,051,000) of which £799,000 (2023:
£775,000) was outstanding at the year end.
The performance fee payable in respect of the year amounted to £2,767,000, the full amount of which was outstanding at the year end
(2023: No performance fee was payable and outstanding at the year end).
The secretarial fee payable for the year amounted to £75,000 (2023: £75,000) of which £19,000 (2023: £19,000) was outstanding at the
year end.
No Director of the Company served as a Director of any company within the Schroder Group at any time during the year.
20. Related party transactions
Details of the remuneration payable to Directors are given in the Directors’ Remuneration Report on page 73 and details of Directors’
shareholdings are given in the Directors’ Remuneration Report on page 74. Details of transactions with the Manager are given in note
19 above. There have been no other transactions with related parties during the year (2023: nil).
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
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21. Disclosures regarding financial instruments measured at fair value
The Company’s financial instruments within the scope of FRS 102 that are held at fair value include its investment portfolio and
derivative financial instruments.
FRS 102 requires financial instruments to be categorised into a hierarchy consisting of the three levels below.
Level 1 – valued using unadjusted quoted prices in active markets for identical assets.
Level 2 – valued using observable inputs other than quoted prices included within Level 1.
Level 3 – valued using inputs that are unobservable.
Details of the Company’s policy for valuing investments and derivative instruments are given in note 1(b) on page 87.
The following table sets out the fair value measurements using the FRS 102 hierarchy at 31 December:
2024
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Financial instruments held at fair value through profit or loss
Equity investments 506,932 – – 506,932
Derivative financial instruments – index put options 505
–
–
505
Derivative financial instruments - forward currency contracts – 458
– 458
Derivative financial instruments - contracts for difference - CFD assets – 30
– 30
Derivative financial instruments - contracts for difference - CFD liabilities – (254)
– (254)
Total 507,437 234 –
507,671
2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Financial instruments held at fair value through profit or loss
Equity investments 484,012 – – 484,012
Derivative financial instruments – index put options 178 – – 178
Total
484,190
– – 484,190
22. Financial instruments’ exposure to risk and risk management policies
In pursuing its objective, the Company is exposed to a variety of financial risks including market risk (comprising currency risk, interest
rate risk and market price risk), liquidity risk and credit risk. The Directors’ policy for managing these risks is set out below.
The process for managing risk is unchanged from the previous year. The Company’s financial instruments may comprise:
• investments in equities and equity related securities which are held in accordance with the Company’s investment objective;
• short-term debtors, creditors and cash arising directly from its operations;
• a multicurrency overdraft facility with HSBC, the purpose of which is to assist in financing the Company’s operations;
• a multicurrency credit facility with The Bank of Nova Scotia, the purpose of which is to assist in financing the Company’s operations;
and
• index put options, which are used to protect the capital value of the portfolio.
• forward currency contracts, the purpose of which is to manage the currency risk arising from the Company’s investment activities.
• contract for differences, which are used for the purpose to gain further exposure to Asian markets.
(a) Market risk
Market risk comprises three elements – foreign currency risk, interest rate risk and market price risk. Information to enable an
evaluation of the nature and extent of these three elements of market risk is given in parts (i) to (iii) of this note, together with sensitivity
analyses where appropriate.
(i) Foreign currency risk
The majority of the Company’s assets, liabilities and income are denominated in currencies other than sterling, which is the Company’s
functional currency and the presentational currency of the financial statements. As a result, movements in exchange rates will affect the
sterling value of those items.
Section 5: Financials
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Management of foreign currency risk
The Manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board. The Board has
authorised the use of derivative instruments to hedge currency exposure as part of the investment strategy to protect the capital value
of the portfolio, or for efficient portfolio management.
Foreign currency exposure
The fair value of the Company’s monetary items that have foreign currency exposure at 31 December are shown below. The Company’s
investments, CFDs and index put options (which are not monetary items) have been included separately in the analysis so as to show
the overall level of exposure.
2024
Hong Kong
Dollars
£’000
US
Dollars
£’000
Taiwan
Dollars
£’000
South
Korean
Won
£’000
Indian
Rupees
£’000
Singapore
Dollars
£’000
Chinese
Yuan
£’000
Australian
Dollars
£’000
Vietnam
Dong
£’000
Other
£’000
Total
£’000
Current assets 11 1,495 207 69 2 1 – 8 224 1 2,018
Derivative instruments held at fair
value through profit or loss – forward
currency contracts – 22,216 – – – – (21,758) – – – 458
Current liabilities – (23,107) – – – – – – – – (23,107)
Foreign currency exposure on net
monetary items 11 604 207 69 2 1 (21,758) 8 224 1 (20,631)
Investments held at fair value
through profit or loss
1
96,283 15,860 122,237 16,603 53,292 38,670 8,136 79,614 13,376 62,861 506,932
Derivative instruments held at fair
value through profit or loss – index
put options and CFDs
1
– 322 – – – – – – – 322
Total net foreign currency exposure 96,294 16,786 122,444 16,672 53,294 38,671 (13,622) 79,622 13,600 62,862 486,623
2023
Hong Kong
Dollars
£’000
US
Dollars
£’000
Taiwan
Dollars
£’000
South
Korean
Won
£’000
Indian
Rupees
£’000
Singapore
Dollars
£’000
Chinese
Yuan
£’000
Australian
Dollars
£’000
Vietnam
Dong
£’000
Other
£’000
Total
£’000
Current assets 11 1,256 302 137 86 1 – 9 41 123 1,966
Current liabilities – (38,327) – – – – – – – (122) (38,449)
Non current liabilities – – – – (586) – – – – – (586)
Foreign currency exposure on net
monetary items 11 (37,071) 302 137 (500) 1 – 9 41 1 (37,069)
Investments held at fair value
through profit or loss
1
76,860 23,415 112,071 35,009 46,379 38,300 – 80,256 6,589 55,733 474,612
Derivative instruments held at fair
value through profit or loss – index
put options – – 178 – – – – – – – 178
Total net foreign currency exposure 76,871 (13,656) 112,551 35,146 45,879 38,301 – 80,265 6,630 55,734 437,721
1
Excluding any stocks or CFDs priced in sterling.
The above year end amounts are broadly representative of the exposure to foreign currency risk during the current and prior year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary financial
assets and financial liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary currency financial
instruments held at each balance sheet date and assumes a 10% (2023: 10%) appreciation or depreciation in sterling against the
currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of exchange
rates during the year.
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If sterling had weakened by 10% this would have had the following effect:
Income Statement – return after taxation
2024
£’000
2023
£’000
Revenue return 1,090 1,212
Capital return (2,199) (3,802)
Total return after taxation (1,109) (2,590)
Net assets (1,109) (2,590)
Conversely if sterling had strengthened by 10% this would have had the following effect:
Income Statement – return after taxation
2024
£’000
2023
£’000
Revenue return (1,090) (1,212)
Capital return 2,199 3,802
Total return after taxation 1,109 2,590
Net assets 1,109 2,590
In the opinion of the Directors, the above sensitivity analysis with respect to monetary financial assets and liabilities is broadly
representative of the whole of the current and comparative year. The sensitivity with regard to the Company’s investments, and any
derivative instruments held, to changes in foreign currency exchange rates is subsumed into market price risk sensitivity below.
(ii) Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits and the interest payable on variable rate
borrowings when rates are re-set.
Management of interest rate risk
Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company may use gearing to enhance
performance (including the use of CFDs). The Board would not expect net gearing to exceed 30% where gearing is defined as
borrowings including CFDs used for investment purposes, less cash, expressed as a percentage of net assets.
Interest rate exposure
The possible effects on cash flows that could arise as a result of changes in interest rates are taken into account when the Company
draws on its overdraft facility or its credit facility.
The exposure of financial assets and financial liabilities to floating interest rates, giving cash flow interest rate risk when rates are re-set,
is shown below:
Exposure to floating interest rates
2024
£’000
2023
£’000
Cash and cash equivalents 1,743 2,527
Bank overdraft (4,534) –
Amounts held at derivative clearing houses and brokers (240) –
Creditors: amounts falling due within one year:
Bank loan (22,357) (37,339)
Total exposure (25,388) (34,812)
Interest receivable on cash balances, or paid on overdrafts, is at a margin below or above the applicable risk free reference rates,
respectively (2023: same).
During the year, the Company amended and restated its £75 million multicurrency credit facility with The Bank of Nova Scotia, London
Branch, to 17 July 2025.
Amounts are normally drawn down on the facility for one month periods. Interest is payable at a rate based on the secured overnight
financing rate, plus a margin, plus the credit adjustment spread. At 31 December 2024, the Company had drawn down USD28million
(£22.4million) at an interest rate of 5.36%, repayable on 31 January 2025.
At 31 December 2023, the Company had drawn down USD47.6 million (£37.3million) at an interest rate of 6.61%.
Section 5: Financials
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The above year end amounts are not representative of the exposure to interest rates during the year as the level of cash balances and
drawings on the credit facility have fluctuated. The maximum and minimum net debt balances during the year are as follows:
2024
£’000
2023
£’000
Maximum debit interest rate exposure during the year – net debt (40,790) (47,462)
Minimum debit interest rate exposure during the year – net debt (21,641) (22,561)
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to a 1.5% (2023: 1.5%) increase
or decrease in interest rates in regards to the Company’s monetary financial assets and financial liabilities. This level of change is
considered to be a reasonable illustration based on observation of current market conditions. The sensitivity analysis is based on the
Company’s monetary financial instruments held at the balance sheet date with all other variables held constant.
Income Statement – return after taxation
2024
1.5%
increase
in rate
£’000
2024
1.5%
decrease
in rate
£’000
2023
1.5%
increase
in rate
£’000
2023
1.5%
decrease
in rate
£’000
Revenue return (76) 76 (102) 102
Capital return (305) 305 (420) 420
Total return after taxation (381) 381 (522) 522
Net assets (381) 381 (522) 522
In the opinion of the Directors, this sensitivity analysis may not be representative of the Company’s future exposure to interest rate
changes due to fluctuations in the level of cash balances and drawings on the credit facility.
(iii) Market price risk
Market price risk includes changes in market prices, other than those arising from interest rate risk, which may affect the value of equity
investments.
Management of market price risk
The Board meets on at least four occasions each year to consider the asset allocation of the portfolio and the risk associated with
particular countries and industry sectors. The Board has authorised the Manager to enter derivative transactions as a means of seeking
capital preservation, subject to limits on the percentage of the portfolio hedged and the duration of derivatives used.
Market price risk exposure
The Company’s total exposure to changes in market prices at 31 December comprises the following investments:
2024
£’000
2023
£’000
Investments held at fair value through profit or loss 506,932 484,012
Derivative financial instruments held at fair value through profit or loss:
Index put options 505 178
CFD (224) –
507,213 484,190
The above data is broadly representative of the exposure to market price risk during the year.
Concentration of exposure to market price risk
An analysis of the Company’s investments is given on pages 34 to 36. This shows that the portfolio mainly comprises investments
quoted on Asian stock markets, index put options and CFDs. Accordingly there is a concentration of exposure to that region.
However it should be noted that an investment may not be entirely exposed to the economic conditions in its country of classification.
Market price risk sensitivity
The following table illustrates the sensitivity of net return after taxation for the year and net assets to an increase or decrease of 10%
(2023: 10%) in the fair values of the Company’s investments. This level of change is considered to be a reasonable illustration based on
observation of current market conditions. The sensitivity analysis is based on the Company’s investments, adjusting for the hedging
effect of the index put options and including the resulting effect on the management fee, but with all other variables held constant.
The sensitivity analysis also takes account of the “beta coefficient” of the portfolio. This is a measure of the volatility of the portfolio
compared with the systemic risk of the entire market. As a result, the percentages in the table below represent a 8.67% (2023: 8.05%)
increase in fair value and a 8.67% (2023: 7.87%) decrease in fair value.
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Section 5: Financials
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Income Statement – return after taxation
2024
10%
increase
in fair value
£’000
2024
10%
decrease
in fair value
£’000
2023
10%
increase
in fair value
£’000
2023
10%
decrease
in fair value
£’000
Revenue return (71) 71 (63) 62
Capital return 43,719 (43,719) 38,774 (37,906)
43,648 (43,648) 38,711 (37,844)
Percentage change in net asset value 9.2 (9.2) 8.6 (8.4)
(b) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting its obligations associated with financial liabilities that are settled by
delivering cash or another financial asset.
Management of the risk
Liquidity risk is not significant as the Company’s assets comprise mainly readily realisable securities, which can be sold to meet funding
requirements if necessary. Short-term flexibility is achieved through the use of overdraft and credit facilities.
Liquidity risk exposure
Contractual maturities of financial liabilities, based on the earliest date on which payment can be required are as follows:
2024
Three
months
or less
£’000
2023
Three
months
or less
£’000
Creditors: amounts falling due within one year
Bank loan – including interest 22,459 37,546
Bank overdraft 4,534 –
Amounts held at derivative clearing houses and brokers 240 –
Derivative financial instruments held at fair value through profit or loss – CFD liabilities 254 –
Securities purchased awaiting settlement – 122
Amounts payable on settlement of derivatives 743 –
Repurchase of ordinary shares into treasury awaiting settlement 255 –
Other creditors and accruals 3,961 1,208
32,446 38,876
(c) Credit risk
Credit risk is the risk that the failure of the counterparty to a transaction to discharge its obligations under that transaction could result
in loss to the Company.
Management of credit risk
This risk is not significant and is managed as follows:
Portfolio dealing
The Company invests almost entirely in markets that operate a “Delivery Versus Payment” settlement process which mitigates the
risk of losing the principal of a trade during settlement. This approach extends to various investment instruments, while CFDs are
settled through cash payments based on the difference between the opening and closing prices, rather than physical delivery of the
underlying assets. The Manager continuously monitors dealing activity to ensure best execution, which involves measuring various
indicators including the quality of trade settlement and incidence of failed trades. Counterparties must be pre-approved by the
Manager’s credit committee.
In relation to CFDs, counterparty risk is limited to the profit on a contract, not the notional value.
Exposure to the custodian
The custodian of the Company’s assets is HSBC Bank plc which has long-term credit ratings of AA- with Fitch and Aa3 with Moody’s.
The Company’s investments are held in accounts which are segregated from the custodian’s own trading assets. If the custodian were
to become insolvent, the Company’s right of ownership of its investments is clear and they are therefore protected. However the
Company’s cash balances are all deposited with the custodian as banker and held on the custodian’s balance sheet. Accordingly, in
accordance with usual banking practice, the Company will rank as a general creditor to the custodian in respect of cash balances.
Section 5: Financials
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Credit risk exposure
The amounts shown in the balance sheet under debtors, derivative financial instruments held at fair value through profit or loss and
cash at bank and in hand represent the maximum exposure to credit risk at the current and comparative year ends. No debtors are
past their due date and none have been provided for. There has been no stock lending during the year, or prior year.
(d) Fair values of financial assets and financial liabilities
All financial assets and liabilities are either carried in the balance sheet at fair value, or the balance sheet amount is a reasonable
approximation of fair value.
23. Capital management policies and procedures
The Company’s capital is represented by its net assets and borrowings, which are managed to achieve the Company’s investment
objective, as set out on page 45.
The Company’s capital management objectives are to ensure that it will continue as a going concern and to maximise the capital return
to shareholders through an appropriate level of gearing. The Company has overdraft and credit facilities in place which may be used to
maximise the return to shareholders through an appropriate level of gearing. The Company uses CFDs as a cost effective and flexible
form of borrowing.
The Board’s policy is to limit the level of net gearing to 30%, where net gearing is defined as borrowings including CFDs used for
investment purposes, less cash, expressed as a percentage of net assets.
2024
£’000
2023
£’000
Borrowings used for investment purposes, less cash (£,000)
1
40,695 34,812
Net assets (£,000) 476,076 448,484
Net gearing (%) 8.5 7.8
1
Included within borrowings for 2024 is an amount of £15,307,000, being the total market exposure on the CFDs held at the year end (2023: nil).
The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis.
This review includes:
• the planned level of gearing, which takes into account the Manager’s views on the market;
• the need to buy back the Company’s own shares for cancellation or to hold in treasury, which takes into account the share price
discount;
• the opportunities for issues of new shares or to reissue shares out of treasury; and
• the amount of dividend to be paid, in excess of that which is required to be distributed.
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Section 5: Financials
103
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National Museum of Natural History, Manila, Philippines
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Sydney Opera House, Sydney, Australia
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Section 6: Other Information (Unaudited)
Annual General Meeting – Recommendations 106
Notice of Annual General Meeting 107
Explanatory Notes to the Notice of Meeting 109
Alternative Performance Measures and Glossary 111
Information about the Company 113
Risk Disclosures 115
105105105
Schroder Asian Total Return Investment Company plc Annual Report and Financial Statements 2024
105
Section 6: Other Information (Unaudited)
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Annual General Meeting – Recommendations
The Annual General Meeting (“AGM”) of the Company will be held
on Thursday, 24 April 2025 at 1.00 p.m. The formal Notice of
Meeting is set out on page 107.
The following information is important and requires your
immediate attention. If you are in any doubt about the action you
should take, you should consult an independent financial adviser,
authorised under the Financial Services and Markets Act 2000.
If you have sold or transferred all of your ordinary shares in the
Company, please forward this document with its accompanying
form of proxy at once to the purchaser or transferee, or to the
stockbroker, bank, or other agent through whom the sale or
transfer was effected, for onward transmission to the purchaser
or transferee.
Ordinary business
Resolutions 1 to 11 are all ordinary resolutions. Resolution 1
is a required resolution. Resolution 2 invites shareholders to
approve the final dividend. Resolution 3 concerns the Directors’
Remuneration Report, on pages 72 to 74.
Resolutions 4 to 7 invite shareholders to elect, or re-elect, each
of the Directors for another year, following the recommendations
of the Nomination Committee, set out on pages 70 and
71 (the Directors’ biographies are set out on pages 60 and
61). Resolutions 8 and 9 concern the re-appointment and
remuneration of the Company’s auditor, discussed in the Audit
and Risk Committee Report on pages 66 to 68.
Special business
Resolution 10: continuation (ordinary resolution)
In accordance with the Company’s Articles of Association,
the Directors are required to put forward a proposal for the
continuation of the Company to shareholders at three yearly
intervals. The Board considers that the long-term investment
objectives of the Company remain appropriate and that the
current Manager has delivered superior returns over the last
three years and remains well placed to continue to do so over the
long-term. An ordinary resolution has therefore been proposed
at the AGM to agree that the Company should continue as an
investment trust for a further three year period.
Resolution 11: Directors’ authority to allot shares
(ordinary resolution) and resolution 12: power to disapply
pre‑emption rights (special resolution)
The Directors are seeking authority to allot a limited number of
unissued ordinary shares for cash without first offering them to
existing shareholders in accordance with statutory pre-emption
procedures.
Appropriate resolutions will be proposed at the forthcoming AGM
and are set out in full in the Notice of AGM. An ordinary resolution
will be proposed to authorise the Directors to allot shares up to a
maximum aggregate nominal amount of £467,622 (being 10% of
the issued share capital (excluding any shares held in treasury) as
at 18 March 2025).
A special resolution will be proposed to authorise the Directors
to allot shares up to a maximum aggregate nominal amount of
£467,622 (being 10% of the issued share capital as at 18 March
2025 on a non pre-emptive basis. This authority includes shares
that the Company sells or transfers that have been held in
treasury. The Directors do not intend to allot ordinary shares or
sell treasury shares, on a non-pre-emptive basis, pursuant to this
authority other than to take advantage of opportunities in the
market as they arise and only if they believe it to be advantageous
to the Company as a whole. Shares issued or treasury shares
reissued, under this authority, will be at a price that is equal to or
greater than the Company’s NAV per share, plus any applicable
costs, as at the latest practicable date before the allotment of
such shares.
If approved, both of these authorities will expire at the conclusion
of the AGM in 2026 unless renewed, varied, or revoked earlier.
Resolution 13: authority to make market purchases of the
Company’s own shares (special resolution)
At the AGM held on 24 April 2024, the Company was granted
authority to make market purchases of up to 14,446,492
ordinary shares of 5p each for cancellation or holding in treasury.
2,437,629 shares have been bought back under this authority
and the Company therefore has remaining authority to purchase
up to 12,008,863 ordinary shares. This authority will expire at the
forthcoming AGM.
The Directors believe it is in the best interests of the Company
and its shareholders to have a general authority for the Company
to buy back its ordinary shares in the market as they keep under
review the share price discount to NAV. A special resolution will be
proposed at the forthcoming AGM to give the Company authority
to make market purchases of up to 14.99% of the ordinary shares
in issue as at 18 March 2025 (excluding treasury shares). The
Directors will exercise this authority to buy back shares only when
the share price is at a discount to the Company’s NAV and only if
the Directors consider that any purchase would be for the benefit
of the Company and its shareholders, taking into account relevant
factors and circumstances at the time. Any shares so purchased
would be cancelled or held in treasury for potential reissue.
If renewed, this authority will lapse at the conclusion of the AGM
in 2026 unless renewed, varied or revoked earlier.
Resolution 14: notice period for general meetings (special
resolution)
Resolution 14 set out in the Notice of AGM is a special resolution
and will, if passed, allow the Company to hold general meetings
(other than annual general meetings) on a minimum notice
period of 14 clear days, rather than 21 clear days as required by
the Companies Act 2006. The approval will be effective until the
Company’s next AGM to be held in 2026. The Directors will only
call general meetings on 14 clear days’ notice when they consider
it to be in the best interests of the Company’s shareholders and
will only do so if the Company offers facilities for all shareholders
to vote by electronic means and when the matter needs to be
dealt with expediently.
Recommendations
The Board considers that the resolutions relating to the above
items of business are in the best interests of shareholders as
a whole. Accordingly, the Board unanimously recommends to
shareholders that they vote in favour of the resolutions to be
proposed at the forthcoming AGM, as they intend to do in respect
of their own beneficial holdings.
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Notice of Annual General Meeting
Notice is hereby given that the thirty-seventh Annual
General Meeting of Schroder Asian Total Return Investment
Company plc will be held on Thursday, 24 April 2025 at 1.00
p.m. at 1 London Wall Place, London EC2Y 5AU to consider
the following resolutions, of which resolutions 1 to 11 will be
proposed as ordinary resolutions, and resolutions 12, 13 and
14 will be proposed as special resolutions:
Ordinary Business
1. To receive the Directors’ Report and the audited financial
statements for the year ended 31 December 2024.
2. To approve a final dividend of 11.50 pence per share for the
year ended 31 December 2024.
3. To approve the Directors’ Remuneration Report for the year
ended 31 December 2024.
4. To elect Marion Sears as a Director of the Company.
5. To approve the re-election of Sarah MacAulay as a Director of
the Company.
6. To approve the re-election of Andrew Cainey as a Director of
the Company.
7. To approve the re-election of Jasper Judd as a Director of the
Company.
8. To re-appoint Ernst & Young LLP as auditor to the Company.
9. To authorise the Directors to determine the remuneration of
Ernst & Young LLP as auditor to the Company.
Special Business
10. To consider, and if thought fit, to pass the following resolution
as an ordinary resolution:
“THAT in accordance with the Articles of Association, the
Company should continue as an investment trust for a further
three year period.”
11. To consider, and if thought fit, pass the following resolution as
an ordinary resolution:
“THAT in substitution for all existing authorities the Directors
be generally and unconditionally authorised pursuant to
section 551 of the Companies Act 2006 (the “Act”) to exercise
all the powers of the Company to allot relevant securities
(within the meaning of section 551 of the Act) up to an
aggregate nominal amount of £467,622 (being 10% of the
issued ordinary share capital at 18 March 2025) for a period
expiring (unless previously renewed, varied or revoked by
the Company in general meeting) at the conclusion of the
Annual General Meeting of the Company in 2026, but that the
Company may make an offer or agreement which would or
might require relevant securities to be allotted after expiry of
this authority and the Board may allot relevant securities in
pursuance of that offer or agreement.”
12. To consider and, if thought fit, to pass the following resolution
as a special resolution:
“THAT, subject to the passing of Resolution 11 set out above,
the Directors be and are hereby empowered, pursuant to
Section 571 of the Act, to allot equity securities (including
any shares held in treasury) (as defined in section 560(1) of
the Act) pursuant to the authority given in accordance with
section 551 of the Act by the said Resolution 11 and/or where
such allotment constitutes an allotment of equity securities
by virtue of section 560(2) of the Act as if Section 561(1) of
the Act did not apply to any such allotment, provided that this
power shall be limited to the allotment of equity securities up
to an aggregate nominal amount of £467,622 (representing
10% of the aggregate nominal amount of the share capital
in issue at 18 March 2025); and where equity securities are
issued pursuant to this power they will only be issued at a
price which is equal or greater than the Company’s NAV per
share as at the latest practicable date before the allotment;
and provided that this power shall expire at the conclusion
of the next Annual General Meeting of the Company but so
that this power shall enable the Company to make offers or
agreements before such expiry which would or might require
equity securities to be allotted after such expiry.”
13. To consider and, if thought fit, to pass the following resolution
as a special resolution:
“THAT the Company be and is hereby generally and
unconditionally authorised in accordance with Section 701 of
the Companies Act 2006 (the “Act”) to make market purchases
(within the meaning of Section 693 of the Act) of ordinary
shares of 5p each in the capital of the Company (“Share”) at
whatever discount the prevailing market price represents to
the prevailing net asset value per Share provided that:
(a) the maximum number of Shares which may be purchased
is 14,019,315, representing 14.99% of the Company’s
issued ordinary share capital as at 18 March 2025
(excluding treasury shares);
(b) the maximum price (exclusive of expenses) which may be
paid for a Share shall not exceed the higher of;
i) 105% of the average of the middle market quotations
for the Shares as taken from the London Stock
Exchange Daily Official List for the five business days
preceding the date of purchase; and
ii) the higher of the last independent bid and the
highest current independent bid on the London Stock
Exchange;
(c) the minimum price (exclusive of expenses) which may be
paid for a Share shall be 5p, being the nominal value per
Share;
(d) this authority hereby conferred shall expire at the
conclusion of the next Annual General Meeting of the
Company in 2026 (unless previously renewed, varied or
revoked by the Company prior to such date);
(e) the Company may make a contract to purchase Shares
under the authority hereby conferred which will or may
be executed wholly or partly after the expiration of such
authority and may make a purchase of Shares pursuant to
any such contract; and
(f) any Shares so purchased will be cancelled or held in
treasury.”
Section 6: Other Information (Unaudited)
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14. To consider and, if thought fit, to pass the following resolution
as a special resolution:
“That a general meeting, other than an Annual General
Meeting, may be called on not less than 14 clear days; notice.”
By order of the Board
For and on behalf of
Schroder Investment Management Limited
Company Secretary
18 March 2025
Registered Office:
1 London Wall Place,
London EC2Y 5AU
Registered Number: 02153093
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Explanatory Notes to the Notice of Meeting
1. Ordinary shareholders are entitled to attend, ask questions
and vote at the meeting and to appoint one or more proxies,
who need not be a shareholder, as their proxy to exercise all or
any of their rights to attend, speak and vote on their behalf at
the meeting.
A proxy form is attached. If you wish to appoint a person other
than the Chair as your proxy, please insert the name of your
chosen proxy holder in the space provided at the top of the
form. If the proxy is being appointed in relation to less than
your full voting entitlement, please enter in the box next to
the proxy holder’s name the number of shares in relation to
which they are authorised to act as your proxy. If left blank
your proxy will be deemed to be authorised in respect of your
full voting entitlement (or if this proxy form has been issued
in respect of a designated account for a shareholder, the full
voting entitlement for that designated account).
Additional proxy forms can be obtained by contacting the
Company’s registrars, Equiniti Limited, on 0800-032-0641. If
calling from outside the UK, please ensure the country code
is used, or you may photocopy the attached proxy form.
Please indicate in the box next to the proxy holder’s name
the number of shares in relation to which they are authorised
to act as your proxy. Please also indicate by ticking the box
provided if the proxy instruction is one of multiple instructions
being given.
Completion and return of a form of proxy will not preclude
a member from attending the Annual General Meeting and
voting in person.
On a vote by show of hands, every ordinary shareholder who
is present in person has one vote and every duly appointed
proxy who is present has one vote. On a poll vote, every
ordinary shareholder who is present in person or by way of a
proxy has one vote for every share of which he/she is a holder.
Voting will be by poll.
The “Vote Withheld” option on the proxy form is provided to
enable you to abstain on any particular resolution. However it
should be noted that a “Vote Withheld” is not a vote in law and
will not be counted in the calculation of the proportion of the
votes ‘For’ and ‘Against’ a resolution.
A proxy form must be signed and dated by the shareholder or
his or her attorney duly authorised in writing. In the case of
joint holdings, any one holder may sign this form. The vote of
the senior joint holder who tenders a vote, whether in person
or by proxy, will be accepted to the exclusion of the votes of
the other joint holder and for this purpose seniority will be
determined by the order in which the names appear on the
Register of Members in respect of the joint holding. To be
valid, proxy form(s) must be completed and returned to the
Company’s registrars, Equiniti Limited, Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA, in the enclosed
envelope together with any power of attorney or other
authority under which it is signed or a copy of such authority
certified notarially, to arrive no later than 48 hours before the
time fixed for the meeting, or an adjourned meeting.
It is possible for you to submit your proxy votes online by
going to Equiniti’s Shareview website, www.shareview.co.uk,
and logging in to your Shareview Portfolio. Once you have
logged in, simply click ‘View’ on the ‘My Investments’ page
and then click on the link to vote and follow the on-screen
instructions. If you have not yet registered for a Shareview
Portfolio, go to www.shareview.co.uk and enter the requested
information. It is important that you register for a Shareview
Portfolio with enough time to complete the registration and
authentication processes. Please note that to be valid, your
proxy instructions must be received by Equiniti no later than
1.00 p.m on 22 April 2025. If you have any difficulties with the
online voting, you should contact the shareholder helpline on
0800-032-0641.
If an ordinary shareholder submits more than one valid proxy
appointment, the appointment received last before the latest
time for receipt of proxies will take precedence.
Shareholders may not use any electronic address provided
either in this Notice of Annual General Meeting or any related
documents to communicate with the Company for any
purposes other than expressly stated.
Representatives of shareholders that are corporations will
have to produce evidence of their proper appointment when
attending the AGM.
2. Any person to whom this notice is sent who is a person
nominated under section 146 of the Companies Act 2006 to
enjoy information rights (a “Nominated Person”) may, under
an agreement between him or her and the shareholder by
whom he or she was nominated, have a right to be appointed
(or to have someone else appointed) as a proxy for the
Annual General Meeting. If a Nominated Person has no such
proxy appointment right or does not wish to exercise it, he
or she may, under any such agreement, have a right to give
instructions to the shareholder as to the exercise of voting
rights.
The statement of the rights of ordinary shareholders in
relation to the appointment of proxies in note 1 above does
not apply to Nominated Persons. The rights described in that
note can only be exercised by ordinary shareholders of the
Company.
3. Pursuant to Regulation 41 of the Uncertificated Securities
Regulations 2001, the Company has specified that only those
shareholders registered in the Register of Members of the
Company at 6.30 p.m. on 22 April 2025, or 6.30 p.m. two days
prior to the date of an adjourned meeting, shall be entitled to
attend and vote at the meeting in respect of the number of
shares registered in their name at that time. Changes to the
Register of Members after 6.30 p.m. on 22 April 2025 shall be
disregarded in determining the right of any person to attend
and vote at the meeting.
4. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service
may do so by using the procedures described in the CREST
manual. The CREST manual can be viewed at www.euroclear.
com. A CREST message appointing a proxy (a “CREST
proxy instruction”) regardless of whether it constitutes the
appointment of a proxy or an amendment to the instruction
previously given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the
issuer’s agent (ID RA19) by the latest time for receipt of proxy
appointments. If you are an institutional investor, you may
be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company
and approved by the registrar. For further information
regarding Proxymity, please go to www.proxymity.io. Your
proxy must be lodged by 1.00 pm on 22 April 2025 in order to
be considered valid. Before you can appoint a proxy via this
process you will need to have agreed to Proxymity’s associated
Section 6: Other Information (Unaudited)
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terms and conditions. It is important that you read these
carefully as you will be bound by them, and they will govern
the electronic appointment of your proxy.
5. Copies of the terms of appointment of the non-executive
Directors and a statement of all transactions of each Director
and of their family interests in the shares of the Company, will
be available for inspection by any member of the Company at
the registered office of the Company during normal business
hours on any weekday (English public holidays excepted) and
at the Annual General Meeting by any attendee, for at least
15 minutes prior to, and during, the Annual General Meeting.
None of the Directors has a contract of service with the
Company.
6. The biographies of the Directors offering themselves for
election and re-election are set out on pages 60 and 61 of the
Company’s Annual Report and Financial Statements for the
year ended 31 December 2024.
7. As at 18 March 2025, 109,114,651 ordinary shares of 5 pence
each were in issue (of which 15,590,197 ordinary shares were
held in treasury). Therefore the total number of voting rights of
the Company as at 18 March 2025 was 93,524,454.
8. A copy of this Notice of Meeting, which includes details of
shareholder voting rights, together with any other information
as required under Section 311A of the Companies Act 2006,
is available on the Company’s web pages,
www.schroders.co.uk/satric.
9. Pursuant to Section 319A of the Companies Act 2006, the
Company must cause to be answered at the Annual General
Meeting any question relating to the business being dealt
with at the Annual General Meeting which is put by a member
attending the meeting, except in certain circumstances,
including if it is undesirable in the interests of the Company or
the good order of the meeting that the question be answered
or if to do so would involve the disclosure of confidential
information.
10. Members satisfying the thresholds in section 527 of the
Companies Act 2006 can require the Company to publish a
statement on its web pages setting out any matter relating to:
(a) the audit of the Company’s financial statements (including
the auditor’s report and the conduct of the audit) that are
to be laid before the Meeting; or
(b) any circumstance connected with an auditor of the
Company ceasing to hold office since the last AGM, that
the members propose to raise at the Meeting. The
Company cannot require the members requesting the
publication to pay its expenses. Any statement placed
on the web pages must also be sent to the Company’s
auditors no later than the time it makes its statement
available on the website. The business which may be
dealt with at the meeting includes any statement that the
Company has been required to publish on its web pages.
11. The Company’s privacy policy is available on its web pages:
www.schroders.co.uk/satric. Shareholders can contact Equiniti
for details of how Equiniti processes their personal information
as part of the Annual General Meeting.
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Alternative Performance Measures and Glossary
Net asset value (“NAV”) per share
The NAV per share of 509.04p (2023: 461.24p) represents the net assets attributable to equity shareholders of £476,076,000 (2023:
£448,484,000) divided by the number of shares in issue of 93,524,454 (2023: 97,234,120).
The change in the NAV amounted to +10.4% (2023: +6.1%) over the year. However, this performance measure excludes the positive
impact of dividends paid out by the Company during the year. When the dividend is factored into the calculation, the resulting
performance measure is termed the “total return”. Total return calculations and definitions are given below.
Total return*
The combined effect of any dividends paid, together with the rise or fall in the share price or NAV per share. Total return statistics
enable the investor to make performance comparisons between investment companies with different dividend policies. Any dividends
received by a shareholder are assumed to have been reinvested in either the assets of the Company at its NAV per share at the time the
shares were quoted ex-dividend (to calculate the NAV per share total return) or in additional shares of the Company (to calculate the
share price total return).
The share price total return for the year ended 31 December
2024 is calculated as follows:
Opening Share price at 31/12/23 440.00p
Opening Share price at 31/12/24 483.00p
Dividend received XD date
Share price
on XD date Factor
11.50p 11/4/24 444.00p 1.0259
Share price total return, being the closing share price,
multiplied by the factor, expressed as a percentage
change in the opening share price: +12.6%
The share price total return for the year ended 31 December
2023 is calculated as follows:
Opening Share price at 31/12/22 409.50p
Opening Share price at 31/12/23 440.00p
Dividend received XD date
Share price
on XD date Factor
11.00p 6/4/23 409.00p 1.0269
Share price total return, being the closing share price,
multiplied by the factor, expressed as a percentage
change in the opening share price: +10.3%
The terms and performance measures below are those commonly used by investment
companies to assess values, investment performance and operating costs. Numerical
calculations are given where relevant. Some of the financial measures below are classified
Alternative performance measures as defined by the European Securities and Markets
Authority. Under this definition, alternative performance measures include a financial measure
of historical financial performance or financial position, other than a financial measure defined
or specified in the applicable financial reporting framework. Alternative performance measures
have been marked with an *.
The NAV total return for the year ended 31 December 2024 is
calculated as follows:
Opening NAV at 31/12/23 461.24p
Closing NAV at 31/12/24 509.04p
Dividend received XD date
NAV on
XD date Factor
11.50p 11/4/24 482.24p 1.0238
NAV total return, being the closing NAV, multiplied
by the factor, expressed as a percentage change
in the opening NAV: +13.0%
The NAV total return for the year ended 31 December 2023 is
calculated as follows:
Opening NAV at 31/12/22 434.60p
Closing NAV AT 31/12/23 461.24p
Dividend received XD date
NAV on
XD date Factor
11.00p 6/4/23 438.71p 1.0251
NAV Total return, being the closing NAV, multiplied by the
factor, expressed as a percentage change in the opening
NAV: +8.8%
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Reference Index
This is the measure against which the Company compares its
performance. With effect from 15 March 2013, “the Reference
Index” has been the MSCI Asia Pacific ex-Japan Index (with net
income reinvested), sterling adjusted. Prior to that date it was
the MSCI AC Asia Pacific ex-Japan Index (with gross income
reinvested), sterling adjusted.
31 December
2024 2023
MSCI AC Asia Pacific Ex-Japan Index (with net
income reinvested), sterling adjusted. (the
“Reference Index”): 12.1% 1.3%
Source: Thomson Reuters.
Discount/premium*
The amount by which the share price of an investment trust
is lower (discount) or higher (premium) than the NAV per
share. If the shares are trading at a discount, investors would
be paying less than the value attributable to the shares by
reference to the underlying assets. A premium or discount
is generally the consequence of supply and demand for the
shares on the stock market. The discount or premium is
expressed as a percentage of the NAV per share. The discount
at the year end amounted to 5.1% (2023: 4.6%), as the closing
share price at 483.00p (2023:440.00p) was 5.1% ( 2023: 4.6%)
lower than the closing NAV of 509.04p (2023: 461.24p)
Contract for Difference (CFD)
A financial derivative between a buyer and a seller, which specifies
that the buyer is required to pay the seller the difference between
the asset’s current value and its value at the time the contract
was initiated. CFDs enable the Company to benefit from price
fluctuations without actually owning the underlying assets and is
an alternative to borrowing.
Gearing*
The net gearing percentage reflects the amount of borrowings
(i.e. bank loans or overdrafts) which the Company has drawn
down and invested in the market. This figure is indicative of
the extra amount by which shareholders’ funds would move if
the Company’s investments were to rise or fall. This represents
borrowings including CFDs used for investment purposes, less
cash, expressed as a percentage of net assets. If the figure so
calculated is negative, this is shown as a “Net cash” position. The
net gearing figure at the year end is calculated as follows:
2024 2023
Borrowings used for investment purposes,
less cash (£'000) 40,695 34,812
Net assets (£,000) 476,076 448,484
Net gearing (%) 8.5 7.8
Ongoing charges*
Ongoing charges is a measure of the ongoing operating costs
of the Company. It is calculated in accordance with the AIC’s
recommended methodology and represents the management
fee and all other operating expenses excluding finance costs,
transactions costs and any performance fee payable, expressed
as a percentage of the average daily net asset values during the
year, as follows:
2024 2023
Management fee and all other operating
expenses excluding finance costs, transaction
costs and any performance fee payable
(£’000) 4,201 3,913
Average daily net asset values during the year
(£’000) 464,355 450,076
Ongoing Charges Ratio (%) 0.90 0.87
Leverage*
For the purpose of the UK AIFM Directive, leverage is any
method which increases the Company’s exposure to financial
risk, including the borrowing of cash and the use of derivatives.
It is expressed as the ratio of the Company’s exposure to its
NAV and is required to be calculated both on a “Gross” and a
“Commitment” method. Under the Gross method, exposure
represents the sum of the absolute values of all positions, so as
to give an indication of overall exposure. Under the Commitment
method, exposure is calculated in a similar way, but after netting
off hedges which satisfy certain strict criteria.
The Company’s leverage policy and details of its leverage ratio
calculation and exposure limits as required by the AIFMD are
published on the Company’s web pages and within this report.
The Company is also required to periodically publish its actual
leverage exposures. As at 31 December 2024 these were:
% of net asset value
Maximum Actual
Gross method 250.00 126.70
Commitment method 200.00 125.30
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Information about the Company
Web pages and share price information
The Company has dedicated web pages, which may be found at
www.schroders.co.uk/satric. The web pages are the Company’s
primary method of electronic communication with shareholders.
They contain details of the Company’s ordinary share price and
copies of the Annual Report and Financial Statements and other
documents published by the Company as well as information
on the Directors, terms of reference of Committees and other
governance arrangements. In addition, the web pages contain
links to announcements made by the Company to the market and
Schroders’ website.
The Company releases its NAV per share on both a cum and ex-
income basis to the market on a daily basis.
Share price information may also be found in the Financial Times
and on the Company’s web pages.
The Association of Investment Companies
The Company is a member of The Association of Investment
Companies. Further information on the Association can be found
on its website, www.theaic.co.uk.
Individual Savings Account (ISA) status
The Company’s shares are eligible for stocks and shares ISAs.
Non-Mainstream Pooled Investments status
The Company currently conducts its affairs so that its shares can
be recommended by independent financial advisers (IFAs) to
ordinary retail investors in accordance with the FCA’s rules in
relation to non-mainstream investment products and intends
to continue to do so for the foreseeable future. The Company’s
shares are excluded from the FCA’s restrictions which apply to
non-mainstream investment products because they are shares in
an investment trust.
Financial calendar
Annual General Meeting April
Final dividend paid May
Half year results announced September
Financial year end 31 December
Annual results announced March
Alternative Investment Fund Managers
Directive (AIFMD) disclosures
The AIFM Directive, as transposed into the FCA Handbook in the
UK, requires that certain pre-investment information be made
available to investors in Alternative Investment Funds (such as the
Company) and also that certain regular and periodic disclosures
are made. This information and these disclosures may be found
either below, elsewhere in this Annual Report, or in the Company’s
AIFM Directive information disclosure document published on the
Company’s web pages.
Illiquid assets
As at the date of this report, none of the Company’s assets are
subject to special arrangements arising from their illiquid nature.
Remuneration disclosures
Quantitative remuneration disclosures to be made in this annual
report in accordance with FCA Handbook rule FUND3.3.5 may be
found in the Company’s AIFMD information disclosure document
published on the Company’s web pages.
Publication of Key Information Document
(KID) by the AIFM
Pursuant to the Packaged Retail and Insurance Based Investment
Products Regulation, the Manager, as the Company’s AIFM,
is required to publish a short KID on the Company. KIDs are
designed to provide certain prescribed information to retail
investors, including details of potential returns under different
performance scenarios and a risk/reward indicator. The
Company’s KID is available on its web pages.
Dividends
Paying dividends into a bank or building society account helps
reduce the risk of fraud and will provide you with quicker access
to your funds than payment by cheque.
Applications for an electronic mandate can be made by contacting
the registrar, Equiniti.
This is the most secure and efficient method of payment and
ensures that you receive any dividends promptly.
If you do not have a UK bank or building society account, please
contact Equiniti for details of their overseas payment service.
Further information can be found at www.shareview.co.uk,
including how to register with shareview Portfolio and manage
your shareholding online.
How to invest
There are a number of ways to easily invest in the Company. The
Manager has set these out at www.schroders.com/invest-in-a-
trust/.
Complaints
The Company has adopted a policy on complaints and other
shareholder communications which ensures that shareholder
complaints and communications addressed to the Company
Secretary, the Chair or the Board are, in each case, considered by
the Chair and the Board.
Section 6: Other Information (Unaudited)
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Job No: 53868 Proof Event: 36 Black Line Level: 11 Park Communications Ltd Alpine Way London E6 6LA
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Job No: 53868 Proof Event: 36 Black Line Level: 11 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Directors
Sarah MacAulay (Chair)
Andrew Cainey
Jasper Judd
Marion Sears
Registered Office
1 London Wall Place
London EC2Y 5AU
Advisers
Alternative Investment Fund Manager (the “Manager” or
“AIFM”)
Schroder Unit Trusts Limited
1 London Wall Place
London EC2Y 5AU
Investment Manager and Company Secretary
Schroder Investment Management Limited
1 London Wall Place
London EC2Y 5AU
Telephone: 020 7658 6189
AMCompanySecretary@Schroders.com
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Lending bank
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London EC2M 3NS
Corporate broker
Winterflood Securities Limited
Riverbank House
2 Swan Lane
London EC4R 3GA
Independent auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareholder Helpline: 0800-032-0641*
Website: www.shareview.co.uk
*Calls to this number are free of charge from UK landlines.
Communications with shareholders are mailed to the address
held on the register. Any notifications and enquiries relating
to shareholdings, including a change of address or other
amendment should be directed to Equiniti Limited at the above
address and telephone number above.
Other information
Company number 02153093.
Shareholder enquiries
General enquiries about the Company should be addressed to
the Company Secretary at the address set out above.
Dealing Codes
ISIN: GB0008710799
SEDOL 0871079
Ticker: ATR
Global Intermediary Identification Number (GIIN)
TRPJG6.99999.SL.826
Legal Entity Identifier (LEI)
549300TQNNGZ0JHO2L78
Privacy notice
The Company’s privacy notice is available on its web pages.
Warning to shareholders
Companies are aware that their shareholders have received unsolicited telephone calls or correspondence concerning
investment matters. These are typically from overseas-based ‘brokers’ who target UK shareholders, offering to sell them what
often turn out to be worthless or high risk shares or investments. These operations are commonly known as ‘boiler rooms’. These
‘brokers’ can be very persistent and extremely persuasive. Shareholders are advised to be wary of any unsolicited advice, offers
to buy shares at a discount or offers of free company reports.
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and organisation
• Check that they are properly authorised by the FCA before getting involved by visiting register.fca.org.uk
• Report the matter to the FCA by calling 0800 111 6768 or visiting fca.org.uk/consumers/report-scam-unauthorised-firm
• Do not deal with any firm that you are unsure about
If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation
Scheme.
The FCA provides a list of unauthorised firms of which it is aware, which can be accessed at fca.org.uk/consumers/
unauthorisedfirmsindividualslist.
More detailed information on this or similar activity can be found on the FCA website at fca.org.uk/consumers/
protect-yourself-scams.
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Risk Disclosures
Concentration risk The Company may be concentrated in a limited number of geographical regions, industry sectors,
markets and/or individual positions. This may result in large changes in the value of the Company, both up
or down.
Counterparty risk The Company may have contractual agreements with counterparties. If a counterparty is unable to fulfil
their obligations, the sum that they owe to the Company may be lost in part or in whole.
Currency risk If the Company’s investments are denominated in currencies different to the currency of the Company’s
shares, the Company may lose value as a result of movements in foreign exchange rates, otherwise known
as currency rates.
Derivatives risk Derivatives, which are financial instruments deriving their value from an underlying asset, may be used to
manage the portfolio efficiently. A derivative may not perform as expected, may create losses greater than
the cost of the derivative and may result in losses to the Company.
Emerging markets &
frontier risk
Emerging markets, and especially frontier markets, generally carry greater political, legal, counterparty
operational and liquidity risk than developed markets.
Gearing risk The Company may borrow money to make further investments, this is known as gearing. Gearing will
increase returns if the value of the investments purchased increase by more than the cost of borrowing,
or reduce returns if they fail to do so. In falling markets, the whole of the value in such investments could
be lost, which would result in losses to the Company.
Liquidity risk The price of shares in the Company is determined by market supply and demand, and this may be
different to the net asset value of the Company. In difficult market conditions, investors may not be able
to find a buyer for their shares or may not get back the amount that they originally invested. Certain
investments of the Company, in particular the unquoted investments, may be less liquid and more difficult
to value. In difficult market conditions, the Company may not be able to sell an investment for full value or
at all and this could affect performance of the Company.
Market risk The value of investments can go up and down and an investor may not get back the amount initially
invested.
Operational risk Operational processes, including those related to the safekeeping of assets, may fail. This may result in
losses to the Company.
Performance risk Investment objectives express an intended result but there is no guarantee that such a result will be
achieved.
Depending on market conditions and the macro economic environment, investment objectives may
become more difficult to achieve.
Share price risk The price of shares in the Company is determined by market supply and demand, and this may be
different to the net asset value of the Company. This means the price may be volatile, meaning the price
may go up and down to a greater extent in response to changes in demand.
Smaller companies risk Smaller companies generally carry greater liquidity risk than larger companies, meaning they are harder
to buy and sell, and they may also fluctuate in value to a greater extent.
Section 6: Other Information (Unaudited)
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Job No: 53868 Proof Event: 36 Black Line Level: 11 Park Communications Ltd Alpine Way London E6 6LA
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Job No: 53868 Proof Event: 34 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Job No: 53868 Proof Event: 34 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA
Customer: Schroders Project Title: Annual Report T: 0207 055 6500 F: 020 7055 6600
Important information: This document is intended to be for information purposes
only and it is not intended as promotional material in any respect. The material
is not intended as an offer or solicitation for the purchase or sale of any financial
instrument. The material is not intended to provide, and should not be relied on for,
accounting, legal or tax advice, or investment recommendations. Information herein
is believed to be reliable but Schroders does not warrant its completeness or accuracy.
No responsibility can be accepted for errors of fact or opinion. Reliance should not
be placed on the views and information in the document when taking individual
investment and/or strategic decisions. Past performance is not a reliable indicator of
future results, prices of shares and the income from them may fall as well as rise and
investors may not get back the amount originally invested. Schroders has expressed
its own views in this document and these may change. Issued by Schroder Investment
Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised and
regulated by the Financial Conduct Authority. For your security, communications may
be taped or monitored.
Schroder Investment Management Limited
1 London Wall Place, London EC2Y 5AU, United Kingdom
T +44 (0) 20 7658 6000
@schroders
schroders.com